NEW YORK (TheStreet) -- Shares of Lloyds Banking Group Plc (LYG - Get Report) are up 3.87% to $5.37 in pre-market trade after reporting that first quarter adjusted profit increased by 22%, putting it in a strong position to start paying dividends again after a six year absence, according to the Wall Street Journal.
Adjusted profit before tax was 1.8 billion pounds, or $3.04 billion, from 1.48 billion pounds in the same quarter of 2013.
The adjusted figures strip out one-off costs and provisions.
Net profit for the quarter was 1.15 billion pounds, down from 1.53 billion pounds in the same three months last year, when the bank made a 776 million pound one-off gain by selling most of its gilts portfolio, the Journal noted.
The adjusted profit figure met analysts' expectations of about 1.8 billion pounds.
TheStreet Ratings team rates LLOYDS BANKING GROUP PLC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LLOYDS BANKING GROUP PLC (LYG) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, LYG's share price has jumped by 60.69%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- LLOYDS BANKING GROUP PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LLOYDS BANKING GROUP PLC continued to lose money by earning -$0.08 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus -$0.08).
- LYG, with its decline in revenue, slightly underperformed the industry average of 13.2%. Since the same quarter one year prior, revenues fell by 21.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market, LLOYDS BANKING GROUP PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 189.9% when compared to the same quarter one year ago, falling from -$621.89 million to -$1,803.08 million.
- You can view the full analysis from the report here: LYG Ratings Report