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BancorpSouth, Inc. (BXS - Analyst Report) is scheduled to report its second-quarter 2014 results on Jul 21, after the market close.

First-quarter 2014 earnings per share of 30 cents were in line with the Zacks Consensus Estimate. Results reflected elevated net interest revenue, absence of provision for credit losses and reduced non-interest expenses. However, lower non-interest income was on the downside.

BancorpSouth delivered positive earnings surprises in two of the trailing four quarters while earnings came in line with the Zacks Consensus Estimate in the remaining two quarters.

Is BancorpSouth likely to miss on earnings this quarter? Let’s see how things have shaped up for this announcement.

Factors to Influence Q2 Results

Driven by a persistent low interest rate environment, we observe that BancorpSouth has been experiencing a shrinking net interest margin (NIM) over the past few years. The decline was primarily due lower yields from earnings assets than interest bearing liabilities. Given the absence of any significant turnaround in the second quarter, NIM is expected to remain under pressure.

Another headwind that might affect BancorpSouth’s financials is declining income from the mortgage lending business. Amid an absence of credible improvement in the mortgage market, the company is facing challenges in pulling up significant revenue from this source.

However, BancorpSouth’s results may get support from its prudent expense management and improving provision trend. Further, we observed that insurance commission, which constitutes a major source of non-interest revenue, has been witnessing a rise over the past few quarters. Given a strong insurance business that compounded with the acquisition of the assets of GEM Insurance Agencies, LP in Dec 2013, we expect insurance commission to drive revenue growth in this quarter as well.

Activities of BancorpSouth during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 33 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that BancorpSouth is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  The Earnings ESP for BancorpSouth is -6.06%. This is because the Most Accurate estimate of 31 cents per share is below the Zacks Consensus Estimate of 33 cents.

Zacks Rank: BancorpSouth’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks That Warrant a Look

Here are some other stocks in the finance sector you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

CIT Group Inc. (CIT - Analyst Report) has an earnings ESP of +4.65% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 22.

Regions Financial Corp. (RF - Analyst Report) has an earnings ESP of +4.76% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 22.

Hancock Holding Co. (HBHC - Analyst Report) has an earnings ESP of +1.70% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 24.

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