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3 S&P 500 Bank Stocks Set to Pull Off a Beat in Q3 Earnings
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JPMorgan (JPM - Free Report) and other big banks – Wells Fargo and Citigroup – kick-started third-quarter 2022 earnings for the banking industry last Friday. Notably, all the bank releases so far have one thing in common – support from higher interest rates and improving loan demand. This resulted in a solid increase in net interest income (NII) and an expansion in net interest margin (NIM). Also, banks guided for further improvement in NII for the year driven by favorable rates and lending scenario.
Basically, growth in NII was the only reason the banks were able to beat the Zacks Consensus Estimate for earnings. Similarly, several other industry players might also be able to post an earnings beat this time.
As finding such stocks from the vast universe of the banking industry can be daunting, we are using our proprietary methodology to find such picks easily. By using the Zacks Stock Screener, we have identified three S&P 500 banks -- Comerica Incorporated (CMA - Free Report) , Huntington Bancshares Incorporated (HBAN - Free Report) and Zions Bancorporation (ZION - Free Report) -- that are poised to surpass the Zacks Consensus Estimate in the third quarter.
These stocks have the ideal combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. And research shows that for stocks with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70%.
Key Factors to Impact Q3 Results
We all know that the financial performance of bank stocks is considered one of the barometers of the nation’s overall health. As economic growth gained traction, the overalllending scenario improved during the third quarter. This, along with higher interest rates, is expected to have majorly supported banks’ NII growth.
Now coming to fee income, on geopolitical and macroeconomic economic concerns, the operating backdrop became challenging for banks to drive up non-interest income. Thus, fee income, which had been a source of key support to banks’ revenues during the pandemic ear, is expected to have recorded dismal performance in the third quarter.
On the cost front, increased investments in technology to boost digital offerings, business streamlining efforts, initiatives to expand into newer areas and inflationary pressure resulted in higher operating expenses.
Now coming to credit costs, deteriorating macroeconomic outlook and higher loan balance led the banks to set aside a large amount as reserves. Thus, banks are expected to have witnessed higher provisions for loan losses in the third quarter.
3 Potential Safe Bets
Comerica, which delivers financial services in three primary regional markets – Texas, California and Michigan – as well as Arizona and Florida, is a leading banking and financial services provider. A robust lending scenario and rising rates are expected to have supported the company’s NII. Management is anticipating NII (including PPP) to increase 21% sequentially.
Further, Comerica’s focus on revenue-enhancing initiatives is likely to have resulted in an improvement in operating efficiency. CMA is scheduled to announce third-quarter numbers on Oct 19.
Huntington Bancshares, a multi-state diversified regional bank holding company, provides a range of banking services and products. As commercial loans constitute a major part of the company’s loan portfolio, it must have gained from improved demand for such loans during the third quarter.
Further, boosted by higher short-term rates, improvement in the lending scenario and increased average earning assets, the company’s asset yields, NIM and NII are anticipated to have been bolstered. However, the industry-wide disappointing performance of fee income is also likely to have hurt Huntington Bancshares’ non-interest income, while the recently closed acquisitions (Capstone Partners and Torana) might have offered some support.
HBAN is scheduled to announce results on Oct 21. The Zacks Consensus Estimate for its third-quarter earnings of 38 cents per share implies a rise of 8.6% from the year-ago reported figure. HBAN has an Earnings ESP of +0.72% and a Zacks Rank #3.
Huntington Bancshares Incorporated Price and EPS Surprise
Zions is a diversified financial service provider, operating a widespread network of more than 400 branches. The company’s footprint spans 11 western states, namely Utah, Idaho, California, Nevada, Arizona, Colorado, Texas, New Mexico, Washington, Oregon and Wyoming.
Similar to Comerica, Zions has significant exposure to commercial loans. Thus, this along with higher rates, is expected to have aided the company’s NII and NIM in the third quarter. As the company plans to reduce overdraft and non-sufficient funds fees, management expects total customer-related fees to decline almost $5 million in the third quarter.
On the cost front, expenses are likely to be increased due to inflationary pressure. Zions is slated to announce results on Oct 24. The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $1.58, implying an increase of 9% year over year. ZION has an Earnings ESP of +0.97% and a Zacks Rank #3.
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3 S&P 500 Bank Stocks Set to Pull Off a Beat in Q3 Earnings
JPMorgan (JPM - Free Report) and other big banks – Wells Fargo and Citigroup – kick-started third-quarter 2022 earnings for the banking industry last Friday. Notably, all the bank releases so far have one thing in common – support from higher interest rates and improving loan demand. This resulted in a solid increase in net interest income (NII) and an expansion in net interest margin (NIM). Also, banks guided for further improvement in NII for the year driven by favorable rates and lending scenario.
Basically, growth in NII was the only reason the banks were able to beat the Zacks Consensus Estimate for earnings. Similarly, several other industry players might also be able to post an earnings beat this time.
As finding such stocks from the vast universe of the banking industry can be daunting, we are using our proprietary methodology to find such picks easily. By using the Zacks Stock Screener, we have identified three S&P 500 banks -- Comerica Incorporated (CMA - Free Report) , Huntington Bancshares Incorporated (HBAN - Free Report) and Zions Bancorporation (ZION - Free Report) -- that are poised to surpass the Zacks Consensus Estimate in the third quarter.
These stocks have the ideal combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. And research shows that for stocks with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70%.
Key Factors to Impact Q3 Results
We all know that the financial performance of bank stocks is considered one of the barometers of the nation’s overall health. As economic growth gained traction, the overall lending scenario improved during the third quarter. This, along with higher interest rates, is expected to have majorly supported banks’ NII growth.
Now coming to fee income, on geopolitical and macroeconomic economic concerns, the operating backdrop became challenging for banks to drive up non-interest income. Thus, fee income, which had been a source of key support to banks’ revenues during the pandemic ear, is expected to have recorded dismal performance in the third quarter.
On the cost front, increased investments in technology to boost digital offerings, business streamlining efforts, initiatives to expand into newer areas and inflationary pressure resulted in higher operating expenses.
Now coming to credit costs, deteriorating macroeconomic outlook and higher loan balance led the banks to set aside a large amount as reserves. Thus, banks are expected to have witnessed higher provisions for loan losses in the third quarter.
3 Potential Safe Bets
Comerica, which delivers financial services in three primary regional markets – Texas, California and Michigan – as well as Arizona and Florida, is a leading banking and financial services provider. A robust lending scenario and rising rates are expected to have supported the company’s NII. Management is anticipating NII (including PPP) to increase 21% sequentially.
Further, Comerica’s focus on revenue-enhancing initiatives is likely to have resulted in an improvement in operating efficiency. CMA is scheduled to announce third-quarter numbers on Oct 19.
The Zacks Consensus Estimate for third-quarter earnings of $2.57 indicates a jump of 35.3% from the year-ago reported figure. CMA has an Earnings ESP of +0.13% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comerica Incorporated Price and EPS Surprise
Comerica Incorporated price-eps-surprise | Comerica Incorporated Quote
Huntington Bancshares, a multi-state diversified regional bank holding company, provides a range of banking services and products. As commercial loans constitute a major part of the company’s loan portfolio, it must have gained from improved demand for such loans during the third quarter.
Further, boosted by higher short-term rates, improvement in the lending scenario and increased average earning assets, the company’s asset yields, NIM and NII are anticipated to have been bolstered. However, the industry-wide disappointing performance of fee income is also likely to have hurt Huntington Bancshares’ non-interest income, while the recently closed acquisitions (Capstone Partners and Torana) might have offered some support.
HBAN is scheduled to announce results on Oct 21. The Zacks Consensus Estimate for its third-quarter earnings of 38 cents per share implies a rise of 8.6% from the year-ago reported figure. HBAN has an Earnings ESP of +0.72% and a Zacks Rank #3.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated price-eps-surprise | Huntington Bancshares Incorporated Quote
Zions is a diversified financial service provider, operating a widespread network of more than 400 branches. The company’s footprint spans 11 western states, namely Utah, Idaho, California, Nevada, Arizona, Colorado, Texas, New Mexico, Washington, Oregon and Wyoming.
Similar to Comerica, Zions has significant exposure to commercial loans. Thus, this along with higher rates, is expected to have aided the company’s NII and NIM in the third quarter. As the company plans to reduce overdraft and non-sufficient funds fees, management expects total customer-related fees to decline almost $5 million in the third quarter.
On the cost front, expenses are likely to be increased due to inflationary pressure. Zions is slated to announce results on Oct 24. The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $1.58, implying an increase of 9% year over year. ZION has an Earnings ESP of +0.97% and a Zacks Rank #3.
Zions Bancorporation, N.A. Price and EPS Surprise
Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote
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