NEW YORK (TheStreet) -- Fifth Third Bancorp (FITB) dipped Thursday after the company announced the Board of Governors of the Federal Reserve System did not object to Fifth Third's Comprehensive Capital Analysis and Review (CCAR) plan for the period of April 1, 2014 through March 31, 2015.
The proposed potential actions under the plan include an increase in quarterly common stock dividend to 13 cents a share during the aforementioned period, a repurchase of common stock up to $669 million and the ability to repurchase shares in the amount of any after-tax gains from the sale of Vantiv if applicable.
"Our capital plan reflects our strong capital base, profitability and earnings generation, which enable us to return excess capital to shareholders while retaining more than sufficient capital to support ongoing business opportunities and balance sheet growth," said CEO Kevin Kabat in a statement. "Our proposed capital distributions would represent an estimated total payout ratio in the mid to upper end of our longer-term target range of 60 to 80 percent.
"We designed our 2014 CCAR plan to maintain regulatory common equity capital ratios generally at current levels, similar to our goals in previous submissions. We believe our plan for capital management and retention is balanced and prudent given our expectations, our capital position, current regulatory capital rules and expectations, and the current economic outlook."
TheStreet Ratings team rates FIFTH THIRD BANCORP as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIFTH THIRD BANCORP (FITB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins, good cash flow from operations, notable return on equity and increase in net income. 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:
- Compared to its closing price of one year ago, FITB's share price has jumped by 41.40%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FITB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for FIFTH THIRD BANCORP is currently very high, coming in at 90.86%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.76% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 529.05% to $768.00 million when compared to the same quarter last year. In addition, FIFTH THIRD BANCORP has also vastly surpassed the industry average cash flow growth rate of 394.92%.
- 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, FIFTH THIRD BANCORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 1.3% when compared to the same quarter one year prior, going from $398.00 million to $403.00 million.
- You can view the full analysis from the report here: FITB Ratings Report