Buyback Expert Banks on People's United

03/06/2014 7:00 am EST


David Fried

Editor, The Buyback Letter

Our buyback-based portfolio is up 121.46% since inception in 2000 versus a gain of 23.96% in the S&P 500 over the same time frame; here's a look at the latest addition to this model portfolio, writes David Fried, editor of The Buyback Letter.

People's United Financial (PBCT) is the bank holding company for People's United Bank, which provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers.

People's United Bank is a community-based, regional bank in the Northeast US, with 410 locations and some $33 billion in assets. Assets managed and administered, which are not reported as assets of the bank, totaled $16 billion in 2013. It has a market cap of $4.2 billion.

Analysts praise the company's strengths in several areas, such as its increase in stock price during the past year, growth in earnings per share, reasonable valuation levels, expanding profit margins, and notable return on equity.

The stock has risen over the past year, as investors have generally rewarded the company for its earnings growth; EPS improved by 5.5% in the most recent quarter compared to the same quarter a year ago.

The company has shown a pattern of positive earnings per share growth over the past two years.

Q4 2013 earnings, released in mid-January, showed assets increased by $1.7 billion (5.4%), and quarterly net income grew by 1.4% to $59.3 million ($0.20 per share). Operating earnings were $60 million ($0.20 per share). For 2013, net income was $232.4 million ($0.74 per share).

During the fourth quarter of 2013, the company repurchased 8.9 million shares, completing the repurchase program; for the full year, PBCT repurchased 33.4 million shares. PBCT has reduced shares outstanding by 8.58% in the past 12 months.

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