Huntington Bancshares: Financial Winner

NEW YORK ( TheStreet) -- Huntington Bancshares ( HBAN) was the winner among the nation's largest banks on Thursday, with shares rising 2.5% to close at $7.73.

The broad indices rebounded with gains of over 1% after two straight days of declines, following a set of better-than-expected economic reports. There were also two major M&A deals announced, including an agreement by Safeway ( SWY) to sell its Canadian operations for $5.7 billion and Gannett's ( GCI) acquisition of Belo Corp. ( BLC) for $1.5 billion.

The Department of Labor reported that initial unemployment claims for the week ended June 8 were down 12,000 to 334,000 from 346,000 the previous week. Economists surveyed by Thomson Reuters on average had expected last week's initial claims number to come in at 345,000.

The four-week moving average for first-time jobless claims was 345,250, declining 7,250 from the previous week's average of 352,500. Continuing claims during the week ending June 1 increased by 2,000 to 2.973 million, but came in lower than 2.975 million expected by economists.

The Census Bureau said that U.S retail sales during may rise by 0.6%, which was the strongest reading on consumer activity since February. Sales had increased 1% in April. Economists, on average, were expecting an increase of 0.4% in May.

The U.S. Bureau of Labor Statistics reported that prices for U.S. imports declined 0.6% in May after a 0.7% drop the prior month because of declining fuel and nonfuel prices. U.S. export prices fell 0.5% after a decline of 0.7% in April.

The anti-inflationary evidence provided by the import price numbers is music to the ears of investors worried over eventual slowdown of securities purchases by the Federal Reserve. The central bank has been making monthly purchases of $85 billion in long-term securities since September, in an effort to hold long-term rates down.

Investors have been anticipating a curtailment of this stimulus activity by the Fed, sending the market yield on 10-Year U.S. Treasury bonds up 55 basis points from the end of April through Wednesday's yield of 2.25%. The yield on the 10-year declined to 2.18% on Thursday.

The Federal Open Market Committee will meet on June 18-19 and issue a statement on Federal Reserve monetary policy.

The KBW Bank Index ( I:BKX) rose 1.4% on Thursday to close at 61.41, with all 24 index components ending the session with gains.

Huntington

Huntington Bancshares of Columbus, Ohio, has seen its stock return 22% this year, following a 19% return during 2012. The shares trade for 1.3 times their reported March 31 tangible book value of $5.91, and for 11.0 times the consensus 2014 EPS estimate of 70 cents. The consensus 2013 EPS estimate is 67 cents.

Based on a quarterly payout of 5 cents, the shares have a dividend yield of 2.59%. Huntington in March announced regulatory approval for its plan for up to $227 million in common share repurchases through the first quarter of 2014.

Bank of America Merrill Lynch analyst Erika Penala rates Huntington a "buy" with an $8.00 price target, and in a note to clients on May 30 wrote that the bank was a solid play on rising long-term rates with a "reasonable" valuation.

HBAN Chart HBAN data by YCharts

Interested in more on Huntington Bancshares? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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