Huntington Bancshares (NASDAQ: HBAN) Shares fell 5.3% at 10 a.m. ET on Monday after the company’s CFO announced disappointing news at a financial conference.
Speaking at the 2024 Morgan Stanley At the U.S. Financials, Payments and CRE Conference, Huntington CFO Zach Wasserman told investors that Huntington’s net interest income (NII) will likely decline 1% to 4% this year from a year ago. This qualifies as a “profit warning” because, The Fly says, Huntington had previously forecast the NII to be roughly flat, plus or minus 2%.
Huntington Bancshares’ 2024 earnings
The Fly points to Huntington Bancshares’ first-quarter earnings report, published April 19, in which Huntington admitted that first-quarter profits fell 33% from a year earlier, to $0.26 per share, after a decline of 9% year-on-year in the NII. .
The report itself did not include a full-year forecast, but in the company’s post-earnings call with financial analysts, Wasserman forecast that the NII would “fall 2% and rise 2% year-over-year” — and noted that this number was already a reduction of “a few basis points” from even previous guidance.
Is Huntington Bancshares stock a sell?
So how bad is this news for Huntington Bancshares investors? At worst, a 4% drop in NII seems to imply a full-year earnings decline less than half as bad as the first quarter – perhaps 15% instead of 33%. And at the midpoint, the new guidance suggests the decline will likely be closer to just 2% or 3%.
That essentially means Huntington’s earnings won’t fall more than 10% this year, to perhaps $1.25 per share or thereabouts, valuing the stock at roughly 10 times full-year earnings. While it would certainly be nice to see Huntington’s profits grow instead of shrinking, paying 10x earnings for a profitable bank that pays 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 stocks mentioned. The Motley Fool has a disclosure policy.
Why Huntington Bank shares fell 5% on Monday was originally published by The Motley Fool
