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NEW YORK (
-- CIT Group
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and feeble growth in its earnings per share.
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Highlights from the ratings report include:
- 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 32.9% when compared to the same quarter one year ago, falling from $162.60 million to $109.10 million.
- CIT GROUP INC's earnings per share declined by 32.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CIT GROUP INC turned its bottom line around by earning $3.36 versus -$2.96 in the prior year. For the next year, the market is expecting a contraction of 6.5% in earnings ($3.14 versus $3.36).
- In its most recent trading session, CIT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Commercial Banks industry and the overall market, CIT GROUP INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for CIT GROUP INC is rather high; currently it is at 65.01%. Regardless of CIT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CIT's net profit margin of 12.15% is significantly lower than the industry average.
CIT Group Inc. operates as the holding company for CIT bank that provides commercial financing and leasing products; and a suite of savings options in the United States. CIT Group has a market cap of $8.56 billion and is part of the financial sector and financial services industry. Shares are down 14.1% year to date as of the close of trading on Friday.
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