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Is a Surprise in Store for BB&T Corp (BBT) in Q4 Earnings?
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BB&T Corporation is scheduled to announce fourth-quarter 2016 and full-year results on Jan 19, before the opening bell.
Last quarter, a notable rise in the top line helped BB&T’s earnings outpace the Zacks Consensus Estimate. Further, loans witnessed strong growth. However, higher operating expenses and a rise in provision for credit losses were headwinds.
The earnings beat, along with the Fed rate hike and the Trump rally propelled the share price of the company. For the three months ended Dec 31, 2016, BB&T’s stock was up nearly 25%.
Notably, analysts maintained a neutral stance regarding BB&T’s performance in the recently concluded quarter. As a result, the Zacks Consensus Estimate of 73 cents remained stable over the last 30 days.
Nonetheless, BB&T boasts a decent earnings surprise history, having beaten the Zacks Consensus Estimate in three of the trailing four quarters as evident from the chart below:
The chances of BB&T surpassing the Zacks Consensus Estimate cannot be conclusively predicted as it does not have the right combination of the two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) to have a significantly higher chance of beating the earnings estimates.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for BB&T is 0.00%. This is because the Most Accurate estimate of 73 cents is in line with the Zacks Consensus Estimate.
Zacks Rank: BB&T’s Zacks Rank #2 increases the predictive power of ESP. But we need to have a positive ESP to be sure of an earnings beat.
Nonetheless, the Zacks Consensus Estimate for the fourth quarter indicates a year-over-year rise of about 7.4%.
Factors to Impact Q4 Results
Let’s check out the factors that are expected to influence Q4 results:
Net Interest Income (NII) to Improve Marginally: BB&T projects average loan growth of around 1–3% sequentially, assuming that the economy will remain at the current level. Thus, driven by an improvement in loan balances, the company’s NII is likely to witness an upside.
However, management is of the opinion that earning assets will decrease $1 billion sequentially due to lower securities balances. As a result, NII might decline $20–$30 million from the previous quarter.
Fee Income to Remain Relatively Flat: Management expects total non-interest income to remain flat year over year as seasonally stronger insurance income is likely to be offset by a seasonal decline in mortgage banking income. However, expectations of rising long-term interest rates might push up mortgage volumes in the quarter.
Further, BB&T anticipates investment banking income to increase in the 1–2% band.
Margin to be Under Pressure: Management expects GAAP net interest margin (NIM) to decline a few basis points during the quarter due to a reduction in purchase accounting accretion. Notably, core NIM is expected to remain essentially flat as lower interest rates are offset by favorable asset mix changes, and favorable funding cost and mix changes as well as the Fed rate hike in Dec 2016.
Expenses to Decline Modestly: Excluding merger-related and restructuring charges, which are anticipated to be approximately $20–$30 million, BB&T expects overall expenses to decline modestly. Notably, quarterly expenses will include approximately $11 million in increased FDIC insurance premium expenses.
Asset Quality to Support Results: BB&T expects loan loss provision to match net charge-offs (NCOs) in addition to providing for incremental loan growth. Also, management expects NCOs to remain within the 0.35–0.45% range, while non-performing asset levels remain stable sequentially.
Stocks That Warrant a Look
Here are a few finance stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in the upcoming announcements.
Citigroup Inc. (C - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #2. It is scheduled to report results on Jan 18.
Citizens Financial Group, Inc. (CFG - Free Report) is slated to release results on Jan 20. It has an Earnings ESP of +3.85% and a Zacks Rank #2.
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Is a Surprise in Store for BB&T Corp (BBT) in Q4 Earnings?
BB&T Corporation is scheduled to announce fourth-quarter 2016 and full-year results on Jan 19, before the opening bell.
Last quarter, a notable rise in the top line helped BB&T’s earnings outpace the Zacks Consensus Estimate. Further, loans witnessed strong growth. However, higher operating expenses and a rise in provision for credit losses were headwinds.
The earnings beat, along with the Fed rate hike and the Trump rally propelled the share price of the company. For the three months ended Dec 31, 2016, BB&T’s stock was up nearly 25%.
Notably, analysts maintained a neutral stance regarding BB&T’s performance in the recently concluded quarter. As a result, the Zacks Consensus Estimate of 73 cents remained stable over the last 30 days.
Nonetheless, BB&T boasts a decent earnings surprise history, having beaten the Zacks Consensus Estimate in three of the trailing four quarters as evident from the chart below:
BB&T Corporation Price and EPS Surprise
BB&T Corporation Price and EPS Surprise | BB&T Corporation Quote
Earnings Whispers
The chances of BB&T surpassing the Zacks Consensus Estimate cannot be conclusively predicted as it does not have the right combination of the two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) to have a significantly higher chance of beating the earnings estimates.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for BB&T is 0.00%. This is because the Most Accurate estimate of 73 cents is in line with the Zacks Consensus Estimate.
Zacks Rank: BB&T’s Zacks Rank #2 increases the predictive power of ESP. But we need to have a positive ESP to be sure of an earnings beat.
Nonetheless, the Zacks Consensus Estimate for the fourth quarter indicates a year-over-year rise of about 7.4%.
Factors to Impact Q4 Results
Let’s check out the factors that are expected to influence Q4 results:
Net Interest Income (NII) to Improve Marginally: BB&T projects average loan growth of around 1–3% sequentially, assuming that the economy will remain at the current level. Thus, driven by an improvement in loan balances, the company’s NII is likely to witness an upside.
However, management is of the opinion that earning assets will decrease $1 billion sequentially due to lower securities balances. As a result, NII might decline $20–$30 million from the previous quarter.
Fee Income to Remain Relatively Flat: Management expects total non-interest income to remain flat year over year as seasonally stronger insurance income is likely to be offset by a seasonal decline in mortgage banking income. However, expectations of rising long-term interest rates might push up mortgage volumes in the quarter.
Further, BB&T anticipates investment banking income to increase in the 1–2% band.
Margin to be Under Pressure: Management expects GAAP net interest margin (NIM) to decline a few basis points during the quarter due to a reduction in purchase accounting accretion. Notably, core NIM is expected to remain essentially flat as lower interest rates are offset by favorable asset mix changes, and favorable funding cost and mix changes as well as the Fed rate hike in Dec 2016.
Expenses to Decline Modestly: Excluding merger-related and restructuring charges, which are anticipated to be approximately $20–$30 million, BB&T expects overall expenses to decline modestly. Notably, quarterly expenses will include approximately $11 million in increased FDIC insurance premium expenses.
Asset Quality to Support Results: BB&T expects loan loss provision to match net charge-offs (NCOs) in addition to providing for incremental loan growth. Also, management expects NCOs to remain within the 0.35–0.45% range, while non-performing asset levels remain stable sequentially.
Stocks That Warrant a Look
Here are a few finance stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in the upcoming announcements.
Citigroup Inc. (C - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #2. It is scheduled to report results on Jan 18.
Citizens Financial Group, Inc. (CFG - Free Report) is slated to release results on Jan 20. It has an Earnings ESP of +3.85% and a Zacks Rank #2.
Fifth Third Bancorp (FITB - Free Report) is slated to release results on Jan 24. It has an Earnings ESP of +2.33% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>