Despite posting better-than-expected fourth-quarter numbers, KeyCorp (NYSE:KEY) shares are under pressure today after the company’s financial outlook disappointed investors.
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During the quarter, revenue declined by 18.5% year-over-year to $1.54 billion. Still, the figure outpaced expectations by $10 million. Similarly, EPS of $0.25 fared better than estimates by $0.02. This performance included after-tax expenses of $209 million from a combination of efficiency-associated expenses, a pension settlement charge, and the special FDIC assessment.
Net income from continuing operations attributable to KeyCorp investors stood at $30 million. The quarter was marked by stabilizing net interest income, low credit costs, and expense control for the company. However, net interest margin trended lower to 2.07% compared to 2.73% in the comparable year-ago period. Net interest income improved sequentially by 0.5% to $928 million.
Further, the company’s provision for credit losses declined to $102 million from $265 million in the prior year period. This points to a more stable economic outlook and the impact of KEY’s efforts to optimize its balance sheet. At the same time, the company expects its net interest income to decline by 2% to 5% this year. On the other hand, noninterest income is seen rising by 5% or higher for the year.
Is KeyCorp Stock a Good Buy?
Despite today’s price value erosion, KeyCorp shares are still up by nearly 31% over the past six months. Overall, the Street has a Moderate Buy consensus rating on KeyCorp, and the average KEY price target of $15.09 implies a modest 12.2% potential upside in the stock.
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