CIT Group Inc (DEL) (NYSE: CIT) and United Community Financial Corp. (NASDAQ:UCFC) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitabiliy, risk, analyst recommendations, institutional ownership, dividends and earnings.

Dividends

CIT Group Inc (DEL) pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. United Community Financial Corp. pays an annual dividend of $0.16 per share and has a dividend yield of 1.8%. CIT Group Inc (DEL) pays out -18.0% of its earnings in the form of a dividend. United Community Financial Corp. pays out 39.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings and Valuation

This table compares CIT Group Inc (DEL) and United Community Financial Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CIT Group Inc (DEL) $2.15 billion 2.99 -$450.95 million ($3.33) -14.26
United Community Financial Corp. $91.25 million 4.91 $20.38 million $0.41 21.98

United Community Financial Corp. has higher revenue, but lower earnings than CIT Group Inc (DEL). CIT Group Inc (DEL) is trading at a lower price-to-earnings ratio than United Community Financial Corp., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares CIT Group Inc (DEL) and United Community Financial Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CIT Group Inc (DEL) -20.50% 5.19% 0.84%
United Community Financial Corp. 18.95% 9.10% 1.03%

Risk and Volatility

CIT Group Inc (DEL) has a beta of 1.49, indicating that its share price is 49% more volatile than the S&P 500. Comparatively, United Community Financial Corp. has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Institutional & Insider Ownership

99.8% of CIT Group Inc (DEL) shares are owned by institutional investors. Comparatively, 58.6% of United Community Financial Corp. shares are owned by institutional investors. 0.5% of CIT Group Inc (DEL) shares are owned by company insiders. Comparatively, 3.6% of United Community Financial Corp. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for CIT Group Inc (DEL) and United Community Financial Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CIT Group Inc (DEL) 1 5 6 0 2.42
United Community Financial Corp. 1 0 2 0 2.33

CIT Group Inc (DEL) presently has a consensus target price of $46.62, indicating a potential downside of 1.85%. United Community Financial Corp. has a consensus target price of $10.50, indicating a potential upside of 16.54%. Given United Community Financial Corp.’s higher probable upside, analysts plainly believe United Community Financial Corp. is more favorable than CIT Group Inc (DEL).

Summary

United Community Financial Corp. beats CIT Group Inc (DEL) on 9 of the 15 factors compared between the two stocks.

About CIT Group Inc (DEL)

CIT Group Inc. (CIT) is a bank holding company (BHC) and a financial holding company (FHC). The Company, together with its subsidiaries, provides financing, leasing and advisory services to middle market companies in a range of industries in North America. The Company’s segments include Commercial Banking, Consumer Banking, Non-Strategic Portfolios, and Corporate and Other. The Commercial Banking segment consists of four divisions: Commercial Finance, Rail, Real Estate Finance, and Business Capital. The Consumer Banking segment includes Retail Banking, Mortgage Lending, and SBA Lending (together referred to as Other Consumer Banking), and Legacy Consumer Mortgages (LCM). The Company’s products and services include account receivables collection, acquisition and expansion financing, asset management and servicing, asset-based loans, debt underwriting and syndication, deposits, enterprise value and cash flow loans, equipment leases, factoring services and financial risk management.

About United Community Financial Corp.

United Community Financial Corp. is financial services holding company. The Company’s subsidiaries include The Home Savings and Loan Company of Youngstown, Ohio (Home Savings or the Bank), HSB Insurance, LLC and HSB Capital, LLC. The principal business of Home Savings is the origination of mortgage loans, including construction loans, on residential and nonresidential real estate located in Home Savings’ primary market area. In addition to real estate lending, Home Savings originates commercial loans and various types of consumer loans. Funds for lending and other investment activities are obtained primarily from retail deposits. HSB Insurance, LLC is an insurance agency that offers a range of insurance products for business and residential customers, which include, auto, homeowners, life-health, commercial, surety bonds and aviation. HSB Capital, LLC provides mezzanine funding for customers. Mezzanine loans are offered to customers in United Community’s market area.

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