The Zacks Analyst Blog Highlights: Fifth Third Bancorp, Vantiv, Meta Financial Group, Flagstar Bancorp and Navistar International
Zacks Equity Research
For Immediate Release
Chicago, IL – March 22, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeFifth Third Bancorp (FITB), Vantiv, Inc. (VNTV), Meta Financial Group, Inc. (CASH), Flagstar Bancorp Inc. (FBC) and Navistar International Corporation (NAV).
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Here are highlights from Thursday’s Analyst Blog:
Fifth Third Hikes Dividend
According to its capital plan under the 2012 Comprehensive Capital Analysis & Review (CCARF), Fifth Third Bancorp (FITB) increased its dividend by 10% to 11 cents. The increased dividend will be paid on Apr 18, 2013 to shareholders of record as of Mar 29.
Further, following the approval of its capital plan under the 2013 CCAR, the company has proposed another dividend hike of 9% to 12 cents per share, which is subject to the approval of the board of directors. The increase may take place anytime between the second quarter of 2013 and the first quarter of 2014.
The company also announced a new share repurchase authorization of up to 100 million shares, replacing the previous authorization in 2012. The previous authorization had roughly 54 million shares outstanding.
Fifth Third’s capital plan for 2013 included potential share repurchases worth up to $984 million through the first quarter of 2014, along with additional incremental repurchases with any after-tax gains from the sale of Vantiv, Inc. (VNTV).
The approval for the dividend hike justifies Fifth Third’s capital strength and will enhance investors’ confidence in the stock. This move represents fourth dividend increase post the dividend cuts made by Fifth Third during the financial crisis. The company had drastically slashed its dividend to 15 cents per share from 44 cents in June 2008 and further lowered it to a penny in December that year.
However, in March last year, the company raised it to 6 cents and again advanced it to 8 cents in September. Later, in October, the company upped it to 10 cents.
Going forward, Fifth Third remains well positioned to benefit from a recovering economy due to a diversified traditional banking platform. Its diverse revenue mix, improved credit quality and strong capital position serve as positive catalyst for the stock. However, the sluggish macro environment and stringent regulations are causes of concern.
Fifth Third currently carries a Zacks Rank #2 (Buy). Other banking stocks that are performing better than Fifth Third include Meta Financial Group, Inc. (CASH) and Flagstar Bancorp Inc. (FBC). Both the stocks carry a Zacks Rank #1 (Strong Buy).
Navistar Amends Billion-Dollar Loan
Navistar International Corporation (NAV) announced the amendment of its $1 billion senior secured term loan facility. Under the amendment, maturity date was extended from Jul 16, 2014 to Aug 17, 2017 and it is expected to include an interest rate repricing.
On Aug 2012, Navistar, had borrowed an aggregate principal amount of $1 billion under the Term Loan Credit Facility. The proceeds from this loan were used to repay all borrowings under Navistar's existing Asset-Based Credit Facility.
Navistar also intended to use the term loan for supporting the adoption of after-treatment solution, which will accelerate delivery of the company’s next-generation clean engine solution. The facility will also support the market transition plan for Class 8 engines, thus providing financial flexibility to the company.
However, the company’s interest expenses had increased due to this additional borrowing. Interest expenses increased $13 million in the first quarter of fiscal 2013 due to the additional term loan facility.
Apart from the amendment, Navistar also announced that it is planning to offer $300 million of unsecured debt. The proceeds from this debt will be used to repay some amount of the term loan.
Warrenville, Ill-based Navistar International manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans. It also provides service parts for various trucks and trailers. Currently, the company retains a Zacks Rank #3 (Hold) on its stock.
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