Fifth Third Bancorp: Financial Loser
The broad saw 1% declines, after the U.S. Labor Department reported that jobless claims fell by 2,000 to 386,000 in the week ended Apr. 14, from an upwardly revised 388,000 in the previous week. The number was worse than expected, as economists polled by Reuters expected a total of 370,000 new jobless claims filings.
The four-week moving jobless claim emplaverage was 374,750, an increase of 5,500 from the previous week's 369,250. The number of people continuing to receive jobless benefits increased by 26,000 in the week ended Apr. 7 to 3.3 million.
The KBW Bank Index (I:BKX) declined 1% to close at 47.83, with 20 out of 24 index components showing declines for the session.
Fifth Third Bancorp's shares have now returned 9% year-to-date, following an 11% decline during 2011.
The Cincinnati lender followed the industry trend, reporting that mortgage revenue doubled during the first quarter, with first-quarter earnings of 45 cents a share, beating the consensus estimate of 36 cents.
However, the first-quarter results included several one-time items, including a $115 million pretax benefit (roughly $75 million, or eight cents a share, after tax) from gains from the initial public offering of Fifth Third's Vantiv (VNTV) subsidiary, a $36 million pretax charge ($23 million, or two cents a share, after tax), "from Vantiv debt termination-related charges recorded in equity method earnings," and a "benefit of $46 million pre-tax (approximately $30 million after-tax, or $0.03 per share), from gains on the higher valuation of the warrant Fifth Third holds in Vantiv."
Excluding the above one-time items, first-quarter operating earnings of 36 cents would match the consensus estimate.
Bank of America Merrill Lynch analyst Erika Penala rates Fifth Third a "Buy," with a $16 price objective, and said on Thursday
Looking past the one-time items, Penala calculated "core EPS" of 37 cents for the first quaeter, and said that "while the quarter, and guidance, pointed to continued positive momentum, we note that this has been a "consensus long" into the quarter," and that "as such, it is hard for us to say how the stock will react to results that were very much in line with projections, given high expectations."
The shares trade for 1.2 times their reported March 31 tangible book value of $11.64 and eight times the consensus 2013 EPS estimate of $1.53. The consensus 2012 EPS estimate is $1.44.
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Shares of New York Community Bancorp (NYB) declined 2% to close at $13.05. The shares have now returned 8% year-to-date, following a 30% decline during 2011.