Why Huntington Bancshares (HBAN) Is Dropping Today

NEW YORK (TheStreet) -- Huntington Bancshares (HBAN) fell 4.1% to $9.49 Thursday on news that fourth-quarter profit declined 5.7% year over year.

Net income for the regional bank dropped to $157.8 million, or 18 cents a share, in the fourth quarter of 2013, from $167.3 million, or 19 cents a share, in the same period in 2012. Despite the drop in revenue, Huntington Bancshares still beat the Capital IQ Consensus Estimate of 17 cents a share in profit.

The bank also said noninterest income dropped 17% in the quarter to $246.6 million, and mortgage banking income fell 61% from the year-ago period. The bank's total revenue dropped by 7% to $685.5 million.

TheStreet Ratings team rates HUNTINGTON BANCSHARES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate HUNTINGTON BANCSHARES (HBAN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations, expanding profit margins, notable return on equity and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.48% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HBAN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 254.86% to $404.21 million when compared to the same quarter last year. In addition, HUNTINGTON BANCSHARES has also vastly surpassed the industry average cash flow growth rate of 119.99%.
  • The gross profit margin for HUNTINGTON BANCSHARES is currently very high, coming in at 93.07%. 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 25.01% trails the industry average.
  • 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 on the basis of return on equity, HUNTINGTON BANCSHARES has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • HUNTINGTON BANCSHARES has improved earnings per share by 5.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HUNTINGTON BANCSHARES increased its bottom line by earning $0.72 versus $0.60 in the prior year. For the next year, the market is expecting a contraction of 1.4% in earnings ($0.71 versus $0.72).

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