CIT Story Overview

CIT -- USA Stock  

USD 53.85  0.44  0.81%

Macroaxis News
  
By David Taylor

Citibank has seen its fair share of problems over the past few years.  In fact, its stock was trading at a record low of just about $.74 per share.  As it is, had you had the temerity to buy into that at that time you would be sitting on a very tidy fortune; the current stock price is $43. per share.  But, Citi was so bruised up it would have been very tough to get into that stock at that time.  There was a tremendous amount of fear in the markets and blood in the streets.

Banking
Fama & French Classification
Citibank has been left behind from the rest of the market but is now ready to be bought.

The banking industry was sold off dramatically from the Great Recession.  Since then, banks have done well.  Now, these banks are about to see real opportunity because of the increase in interest rates.   Because of that the financial stocks have skyrocketed since November.  Here is one stock that was left behind and will likely catch up.  




Citibank has seen its fair share of problems over the past few years.  In fact, its stock was trading at a record low of just about $.74 per share.  As it is, had you had the temerity to buy into that at that time you would be sitting on a very tidy fortune; the current stock price is $43. per share.  But, Citi was so bruised up it would have been very tough to get into that stock at that time.  There was a tremendous amount of fear in the markets and blood in the streets.  

But, it might be that the market is offering you another opportunity to get into Citi at a very good price.  Whereas the rest of the stock market is trading at a price-to-earnings ratio of about 26, Citi is half that at 13.  I believe that there is very likely to be a correction in the market in the next few weeks.  The Dow Industrials has moved up 12.5% since the November election.  That is an impressive if it had been the return for the year.  But, that is the return for just about 8 week’s time.  So, likely, participants will be taking money off the table.  That will likely mean that CIT may move even lower than where it is, dipping to maybe as low as 9 times earnings.  

Speaking of earnings, here are the last several years:

2011:    $0.13

2012:   -$2.95  

2013:    $3.37 

2014:    $5.99  

2015:    $5.70

Like all companies during 2012 there was a sharp downturn in economic activity.  And, like most companies since then the profits have returned.  But, unlike most companies, there is not frenzied buying into this stock pushing it above the average earnings-per-share.  Again, CIT is trading at half the current level of the overall market.

But, I believe that the fortunes of financial companies are changing significantly and that there will be significant profits going forward.  This has a lot to do with the fact that interest rates are moving higher and banks and financial services firms earn their profits via interest rates.  But, the rates have been so low that there has not been a significant spread between what a bank charges its lenders and what the bank pays its savings accounts.  Now, since interest rates are moving upward the spread will widen; banks have the potential to be very profitable.  

Another reason that I like banks is that these companies have been hit so hard because of the financial crisis that they stripped down their companies to the absolute bare minimum.  So, any new revenues, outside of variable costs, should make it to the bottom line.  And, seeing that the potential for profits is growing significantly as it is then banks will do well.  

Then there is the other factor, the economy itself.  As the economy expands forward then the demand for money will increase significantly.  Consumers are earning more and more and that will translate into increased purchases in the services sectors of the economy.  Then, companies will begin to increase their own spending on facilities.  We are seeing this already print in the economic data.  This all takes money, what banks do best.  

Despite being left behind, and despite having been in such a dire situation, I see a lot of potential in CIT.  I remember looking at that stock when it was so low and thinking it would have been a great time to pick a few shares up for my own portfolio.  But, I did not have the nerves of steel necessary to pull the trigger.  I missed that opportunity.  I think I am going to add in some now and not miss twice. 

Story Momentum

This article from Macroaxis published on 06 of January contributed to the next trading period closing price depreciation.The overall trading delta to the next next day price was 1.03% . The overall trading delta when the story was published to current price is 24.54% .

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Net Income

Net Income Comparative Analysis

  Net Income 
      CIT Comparables 
CIT is currently under evaluation in net income category among related companies. Net income is the profit of a company for the reporting period which is derived after taking revenues and gains and subtracting all expenses and losses. Net income is one of the most watched numbers by money managers as well as individual investors.
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