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Are Investors Undervaluing CIT Group (CIT) Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is CIT Group (CIT). CIT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 8.20, while its industry has an average P/E of 9.32. Over the past 52 weeks, CIT's Forward P/E has been as high as 10.85 and as low as 7.75, with a median of 9.72.

We also note that CIT holds a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CIT's PEG compares to its industry's average PEG of 1.08. CIT's PEG has been as high as 1.08 and as low as 0.78, with a median of 0.97, all within the past year.

Investors should also recognize that CIT has a P/B ratio of 0.72. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.74. Over the past 12 months, CIT's P/B has been as high as 0.97 and as low as 0.67, with a median of 0.87.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CIT has a P/S ratio of 1.28. This compares to its industry's average P/S of 1.68.

Finally, investors will want to recognize that CIT has a P/CF ratio of 4.94. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.98. Within the past 12 months, CIT's P/CF has been as high as 6.77 and as low as 4.59, with a median of 5.98.

Value investors will likely look at more than just these metrics, but the above data helps show that CIT Group is likely undervalued currently. And when considering the strength of its earnings outlook, CIT sticks out at as one of the market's strongest value stocks.


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