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CIT Group

(CIT) - Get CIT Group Inc. Report

reported third-quarter earnings before the bell Tuesday that split a pair of analysts who had been recommending the stock.

Investors were initially pleased with the results, driving up the stock more than 2.02% to $52 in pre-market trading.

Earnings of $200 million or 99 cents per share were above the consensus of 94 cents per share. CIT posted a net loss of $299 million, $1.49 per diluted share, for the third quarter of 2012.

Oppenheimer & Co. analyst Chris Kotowski, who rates the stock "outperform," wrote that while earnings appeared to beat consensus, they revealed no substantive growth vs. the previous quarter.

Kotowski did not count a $48 million asset impairment and restructuring charge, partially offset by $34 million in gains on asset sales. As a consequence, he determined operating earnings to be about 79 cents per share.

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"That is up nicely year-over-year from $0.36 (on our basis) but flattish with the $0.78 from the prior quarter, which we view as somewhat disappointing," Kotowski wrote.

His main complaint was with CIT's gross interest income. Though average loans were up $300 million vs. the previous quarter, gross interest income was down $15 million.

"While some of this may be due to the sale of Dell Europe, and probably not very profitable revenue, they are clearly spinning their wheels a bit on this line," Kotowski wrote.

BTIG analyst Mark Palmer, however, was more pleased with the results. He reiterated his "buy" rating and $55 price target after the release, citing CIT's "enormous" capital ratios, including a Tier 1 ratio of 16.7%. While noting a dividend increase by CIT announced late Monday, Palmer argued "CIT is well positioned to become an even more compelling capital-return story going forward."

Palmer saw the earnings beat as evidence of "steady progress from an operating standpoint." He went on to argue "CIT's current valuation still fails to reflect its attractive risk/reward dynamic and potential to significantly boost its

tangible book value during the coming quarters. And we believe the endgame for CIT is likely to be a sale of the company at a significant premium to its current share price."


Written by Dan Freed in New York


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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.