Even though they're approaching an annual low, Capitol Federal Financial (NASDAQ:CFFN) will struggle to generate strong earnings in a low interest rate, low-growth economic environment, which has no end in sight for financial institutions in America.
Barclays (NYSE:BCS) said, "Although the 9% first-year dividend yield and valuation below tangible book could generate enough investor interest for CFFN to be able to execute the deal, we are lowering our price target to $26 due to the significant challenges faced by management in deploying the capital in a low-growth and low long-term interest rate environment...We estimate full-year 2011 EPS of $0.21 (or $0.38 EPS excluding the impact of the charitable contribution) and full-year 2012 EPS of $0.38."
Barclays did maintain an "Overweight" rating on Capitol Federal, although they slashed their price target from $43 to $26. Capitol closed Tuesday at $23.36, falling $0.05, or 0.21 percent.
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