10 Big Bank Stocks Gearing Up for Third-Quarter Earnings (Update 3)

4. Fifth Third Bancorp
Shares of Fifth Third Bancorp (FITB) of Cincinnati closed at $15.51 Friday, returning 24% year-to-date, following an 11% decline during 2011.

The shares trade for 1.4 times tangible book value, and for 9.8 times the consensus 2013 EPS estimate of $1.58. The consensus 2012 EPS estimate is $1.59.

Based on a quarterly payout of 10 cents, the shares have a dividend yield of 2.58%.

Fifth Third's ROA for the 12-month period ended June 30 was 1.29%, while the company's ROE was 11.15%.

Analysts polled by Thomson Reuters expect Fifth Third to report third-quarter EPS of 38 cents, declining from 40 cents the previous quarter and also a year earlier.

The company in August announced that the Federal Reserve had approved its revised 2012 capital plan, including an increase in the quarterly dividend to 10 cents a share from eight cents, and "new share repurchase authorization of up to 100 million shares," including up to $600 million in buybacks through the first quarter of 2013.

KBW analyst David Konrad on Monday downgraded Fifth Third to a "Market Perform" rating, from "Market Perform," while maintaining his price target of $17, saying "we have limited upside to our price target," and that "although the stock is trading at a modest discount to its peers on 2013 earnings (9.7x versus 11.0x), FITB is trading at a modest premium to its peers on earnings after excluding the benefits of reserve releases in our estimates (11.3x versus 11.1x)."

During the third quarter, "FITB's stock is up 19% compared to 12% for large regional bank peers," Konrad said, adding that "as a result, FITB's 2013 multiple, excluding reserve release, has improved this quarter from 9.8x to 11.3x, or to a modest premium to peers."

The analyst also said that "we believe FITB has minimal credit leverage going forward," meaning minimal reserve releases, and that "given the challenging rate environment and meaningful benefits from liabilities repricing occurring through this quarter, we anticipate NIM pressure may hold back earnings growth in 2013."

Wells Fargo analyst Matthew Burnell followed suit, downgrading Fifth Third on Tuesday to a "Market Perform" rating from "Outperform," to reflect "a more evenly matched risk/reward relationship."

Burnell also said that "commercial loan growth trends, which have been robust through most of this year, are beginning to flag which could have a bigger effect on FITB than peers," and that the Fed's approval of the revised capital plan and the associated dividend hike and buyback plan announcement "have now been completed and announced, and appear to be largely incorporated into FITB's current share price."

Burnell raised his 2012 EPS estimate by four cents to $1.59, to reflect the share repurchases, while lowering his 2013 EPS estimate by a penny, to $1.64. The analyst also introduced a 2014 EPS estimate of $1.70.

FITB data by YCharts

Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.

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