NEW YORK (TheStreet) -- Shares of First Niagara Financial (FNFG) rose 5.19% to $7.90 in morning trading Wednesday in the wake of the BB&T (BBT) - Get Report acquisition of Susquehanna Bancshares (SUSQ) .
Some analysts have named First Niagara Financial as a potential target for a merger or acquisition after BB&T's move, which is one of just a handful of bank consolidation maneuvers in the past few years.
BB&T will buy Susquehanna in a cash-and-stock deal worth approximately $2.5 billion in order to expand its presence in New Jersey, Pennsylvania, Maryland and West Virginia. BB&T will pay 0.253 of its own shares and $4.05 in cash for each share of Susquehanna, according to the terms of the deal. The offer is worth about $13.75 a share as of Susquehanna's Tuesday closing price of $9.90.
Separately, TheStreet Ratings team rates FIRST NIAGARA FINANCIAL GRP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIRST NIAGARA FINANCIAL GRP (FNFG) 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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for FIRST NIAGARA FINANCIAL GRP is currently very high, coming in at 86.29%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -173.17% is in-line with the industry average.
- FNFG, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- FIRST NIAGARA FINANCIAL GRP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FIRST NIAGARA FINANCIAL GRP increased its bottom line by earning $0.75 versus $0.40 in the prior year. For the next year, the market is expecting a contraction of 286.7% in earnings (-$1.40 versus $0.75).
- 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 930.4% when compared to the same quarter one year ago, falling from $79.14 million to -$657.23 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Banks industry and the overall market, FIRST NIAGARA FINANCIAL GRP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FNFG Ratings Report