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CIT Group Closes Aircraft Leasing Business Sale to Avolon
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Shares of CIT Group Inc. gained nearly 4% following the announcement that it has completed the sale of its aircraft leasing business, CIT Commercial Air, to Avolon Holdings Limited. Avolon Holdings, an international aircraft leasing company and the wholly-owned subsidiary of China’s Bohai Capital Holding Co. Ltd., paid $10.4 billion for the purchase.
CIT Group will utilize the cash proceeds in managing its liabilities and returning capital to shareholders. It is likely to redeem $5.8 billion in senior unsecured debt and use $3 billion for shareholder return.
The company is also assessing the issuance of nearly $325 million of Tier 1 qualifying preferred stock. This should help in generating an equal amount of incremental return on common equity.
While announcing the deal in Oct 2016, the company mentioned that the divestiture would include the sale of the operations of the aircraft-leasing business, forward order commitments and certain assets and liabilities worth $11.1 billion and $1.7 billion, respectively, as of Jun 30, 2016.
CIT Groups’ rationale behind the divestiture was to ease its operations and become a leading national middle-market bank. Moreover, the sale is expected to help the company maximize shareholder value and enhance core funding profile.
Upon successful completion, Ellen R. Alemany, Chairwoman and Chief Executive Officer, said, "As we look ahead, we will continue to strengthen our position as a leading national bank for lending and leasing to the middle market and small businesses, while driving long-term shareholder value."
In the last few years, CIT Group sold its businesses in Brazil and Mexico and completed the sale of the UK Equipment Finance platform. Recently, it also completed the sale of 30% of its stake in the joint ventures with Tokyo Century Corporation. With the recent sale, the company also withdrew itself from the commercial aircraft-leasing business.
Notably, post air separation, management is of the opinion that other income will be 0.60–0.75% of average earning assets in 2018. Also, it expects net finance margin to be in the range of 3.00–3.50% of the AEA. Further, the company projects operating expenses (excluding restructuring charges and intangible assets amortization) in the range of 1.9–2.2% of AEA in 2018.
Shares of CIT Group returned 43.1% in the last one year, outperforming the 20.9% growth for the Zacks categorized Financial - Miscellaneous Services industry.
Currently, the company carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the finance space are Raymond James Financial, Inc. (RJF - Free Report) , Texas Capital Bancshares, Inc. (TCBI - Free Report) and Comerica Incorporated (CMA - Free Report) .
Raymond James Financial witnessed an upward earnings estimate revision of 3.1% for the current fiscal year, in the last 60 days. Its share price increased 27.6% in the last six months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Capital Bancshares carries a Zacks Rank #2 (Buy). For the current year, its Zacks Consensus Estimate was revised nearly 1% upward in the last 60 days. The company’s share price increased 42.4% in the last six months.
Comerica also carries a Zacks Rank #2. The company witnessed an upward earnings estimate revision of 1.7% for the current year, in the last 60 days. Its share price increased 39.4% in the last six months.
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CIT Group Closes Aircraft Leasing Business Sale to Avolon
Shares of CIT Group Inc. gained nearly 4% following the announcement that it has completed the sale of its aircraft leasing business, CIT Commercial Air, to Avolon Holdings Limited. Avolon Holdings, an international aircraft leasing company and the wholly-owned subsidiary of China’s Bohai Capital Holding Co. Ltd., paid $10.4 billion for the purchase.
CIT Group will utilize the cash proceeds in managing its liabilities and returning capital to shareholders. It is likely to redeem $5.8 billion in senior unsecured debt and use $3 billion for shareholder return.
The company is also assessing the issuance of nearly $325 million of Tier 1 qualifying preferred stock. This should help in generating an equal amount of incremental return on common equity.
While announcing the deal in Oct 2016, the company mentioned that the divestiture would include the sale of the operations of the aircraft-leasing business, forward order commitments and certain assets and liabilities worth $11.1 billion and $1.7 billion, respectively, as of Jun 30, 2016.
CIT Groups’ rationale behind the divestiture was to ease its operations and become a leading national middle-market bank. Moreover, the sale is expected to help the company maximize shareholder value and enhance core funding profile.
Upon successful completion, Ellen R. Alemany, Chairwoman and Chief Executive Officer, said, "As we look ahead, we will continue to strengthen our position as a leading national bank for lending and leasing to the middle market and small businesses, while driving long-term shareholder value."
In the last few years, CIT Group sold its businesses in Brazil and Mexico and completed the sale of the UK Equipment Finance platform. Recently, it also completed the sale of 30% of its stake in the joint ventures with Tokyo Century Corporation. With the recent sale, the company also withdrew itself from the commercial aircraft-leasing business.
Notably, post air separation, management is of the opinion that other income will be 0.60–0.75% of average earning assets in 2018. Also, it expects net finance margin to be in the range of 3.00–3.50% of the AEA. Further, the company projects operating expenses (excluding restructuring charges and intangible assets amortization) in the range of 1.9–2.2% of AEA in 2018.
Shares of CIT Group returned 43.1% in the last one year, outperforming the 20.9% growth for the Zacks categorized Financial - Miscellaneous Services industry.
Currently, the company carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the finance space are Raymond James Financial, Inc. (RJF - Free Report) , Texas Capital Bancshares, Inc. (TCBI - Free Report) and Comerica Incorporated (CMA - Free Report) .
Raymond James Financial witnessed an upward earnings estimate revision of 3.1% for the current fiscal year, in the last 60 days. Its share price increased 27.6% in the last six months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Capital Bancshares carries a Zacks Rank #2 (Buy). For the current year, its Zacks Consensus Estimate was revised nearly 1% upward in the last 60 days. The company’s share price increased 42.4% in the last six months.
Comerica also carries a Zacks Rank #2. The company witnessed an upward earnings estimate revision of 1.7% for the current year, in the last 60 days. Its share price increased 39.4% in the last six months.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>