Huntington Bank Shares (NASDAQ:HBAN) The stock fell 5.3% through 10 a.m. ET Monday after the company’s CFO blurted disappointing news at a financial conference.
Speaking at the 2024 edition Morgan Stanley US Financial Services, Payments and CRE Conference this morning, Huntington CFO Zach Wasserman told investors that Huntington net interest income (NII) this year the drop will probably be 1 to 4% compared to last year. This is considered an “earnings warning” because, according to The Fly, Huntington previously predicted that NII would be roughly flat, plus or minus 2%.
Huntington Bancshares 2024 results
The Fly refers to Huntington Bancshares’ first quarter earnings report, released on April 19, in which Huntington admitted that its first quarter profits fell 33% from a year earlier, to $0.26 per share, on a 9% year-over-year decline in NII. .
The report itself did not contain a full-year forecast, but during the company’s post-earnings call with financial analysts, Wasserman predicted that NII would be “down 2% and up 2% on a full annual basis” — and observed that this number was Already a reduction of “a few basis points” compared to even earlier forecasts.
Is Huntington Bancshares Stock a Sell?
So how bad is this news for Huntington Bancshares investors? In a worst-case scenario, a 4% decline in NII would seem to imply a decline in full-year profits that is half as large as in the first quarter – perhaps 15% instead of 33%. And at the midpoint, the new forecast range suggests the decline will likely be closer to just 2% or 3%.
That actually implies that Huntington’s earnings this year won’t decline by more than 10%, down to perhaps $1.25 per share or thereabouts, valuing the stock at about 10 times the full year’s earnings. While it would certainly be nice to see Huntington’s revenue increase rather than decrease, paying 10 times earnings for a profitable bank paying a 4.6% dividend yield doesn’t seem like such a bad deal to me.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Mad Motley has a disclosure policy.
Why Huntington Bank shares fell 5% on Monday was originally published by The Motley Fool
