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Why People's United Financial (PBCT) Is Down Today

Update (4:13 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- People's United Financial  (PBCT) fell 3.38% to $14.85, down 52 cents from its previous close of $15.37, at the close of the trading day on Friday after a pair of downgrades from JPMorgan and FBR Capital after the company released its fourth-quarter results.

The stock had a volume of 21,263,369, nearly seven times its average of 3,116,260. It hit a high of $15.01 and a low of $14.62 for the day. 

People's United announced that it posted net income of $59.3 million, or 20 cents a share, for the fourth quarter of 2013, compared to $61.2 million, or 18 cents a share, for the fourth quarter of 2012 and $58.5 million, or 19 cents a share, for the third quarter of 2013. Operating earnings landed at $60 million, or 20 cents a share, for the fourth quarter of 2013, compared to $63.2 million, or 19 cents a share, for the fourth quarter of 2012 and $60.8 million, or 20 cents a share, for the third quarter of 2013.

JPMorgan downgraded the stock to Neutral from Overweight and set the target price at $16. Analysts stated in the report that it "no longer see(s) the company as positioned to deliver EPS above Street estimates and...at current valuation levels the stock appears fairly priced."

FBR Capital also downgraded the stock to Underperform from Market Perform and set the target price at $14. It cited valuation and the company's diminished capital as the reasons for the downgrade.

TheStreet Ratings team rates PEOPLE'S UNITED FINL INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEOPLE'S UNITED FINL INC (PBCT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.72 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.72).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 87.86%. Regardless of PBCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PBCT's net profit margin of 17.40% is significantly lower than the industry average.
  • The revenue fell significantly faster than the industry average of 104.7%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: PBCT Ratings Report

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