Why Huntington Bank Stock Dropped 5% on Monday

Huntington Bancshares (HBAN -5.67%) stock fell 5.3% through 10 a.m. ET on Monday after the company’s CFO let slip some disappointing news at a financial conference.

Speaking at the 2024 Morgan Stanley US Financials, Payments and CRE Conference this morning, Huntington CFO Zach Wasserman told investors that Huntington’s net interest income (NII) this year will probably fall 1% to 4% from a year ago. This qualifies as an “earnings warning” because, says The Fly, Huntington had previously predicted NII would be roughly flat, plus or minus 2%.

Huntington Bancshares’ 2024 earnings

The Fly is referring to Huntington Bancshares’ first-quarter earnings report, published April 19, in which Huntington admitted its Q1 earnings dropped 33% from a year prior, to $0.26 per share, on a 9% year-over-year decline in NII.

The report itself didn’t contain a prediction for the full year, but in the company’s post-earnings call with financial analysts, Wasserman made the prediction that NII would be “down 2% and up 2% on a full year basis” — and observed that this number was already a reduction of “a few basis points” from even earlier guidance.

Is Huntington Bancshares stock a sell?

So how bad is this news for Huntington Bancshares investors? Worst case, a 4% decline in NII would seem to imply a full-year earnings decline less than half as bad as in Q1 — perhaps 15% instead of 33%. And at the midpoint, the new guidance range suggests the decline will probably be closer to only 2% or 3%.

That actually implies that Huntington’s earnings this year will decline no more than 10%, 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 earnings growing rather than shrinking, paying 10x earnings for a profitable bank paying a 4.6% dividend yield doesn’t sound like such a bad deal to me.