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Citizens Financial (CFG) Q4 Earnings: A Beat in Store?
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We expect Citizens Financial Group, Inc. (CFG - Free Report) to beat earnings expectations when it reports fourth-quarter 2016 results, before the opening bell on Jan 20.
Why a Likely Positive Surprise?
Our proven model shows that Citizens Financial has the right combination of two key ingredients to beat earnings.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at +3.85%. This is a very significant and leading indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank #2 (Buy): Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Citizens Financial’s Zacks Rank #2 and ESP of +3.85% makes us confident of an earnings beat.
Further, the company boasts an impressive earnings surprise history as depicted in the chart below:
Citizens Financial Group, Inc. Price and EPS Surprise
Regarding the stock’s performance, shares of the company surged 62.6% over the past one year, outperforming 39.3% growth for the Zacks categorized Savings and Loans Industry.
What to Expect in Q4?
Muted growth in net interest income, margin pressure lingers: While management expects average loan growth of around 1.5–2% on a sequential basis, we do not expect significant improvement in net-interest income amid the low-rate environment. Though rise in the 10-year Treasury yield since Nov 8, 2016 is anticipated to alleviate pressure on the net interest margin (NIM) to some extent, the favorable influence on NIM is not likely to occur in the quarter.
Increase in expenses: Management projects a modest rise in expenses, on a sequential basis, due to seasonality. However, the company expects to generate positive operating leverage.
Provisions to trend high: While broader credit trends are anticipated to remain favorable, provisions may reflect moderate growth, due to increase in loans. Within the energy portfolio, the company estimates a slight migration to net charge-offs and non-performing loans. However, for its commercial and retail portfolios, credit metrics are predicted to improve in the fourth quarter. In addition, for the auto portfolio, credit losses are expected to normalize and stay in the 70-basis points range.
Fee income to exhibit strength: On a positive note, non-interest income might get a lift owing to Citizens Financial’s ongoing initiatives to boost its several capabilities. Notably, the company expects stable non-interest income with the consistent robust performance of capital markets. However, compared with the third-quarter levels, mortgage fees are expected to be lower.
However, activities of Citizens Financial during the quarter to be reported were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 52 cents over the last seven days. Notably, the estimated figure represents year-over-year growth of 25%.
Stocks That Warrant a Look
Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
The earnings ESP for Citigroup Inc. (C - Free Report) is +1.79% and it carries a Zacks Rank #2. The company is expected to release fourth-quarter results on Jan 18.
Fifth Third Bancorp (FITB - Free Report) has an earnings ESP of +2.33% and a Zacks Rank #1. It is slated to report fourth-quarter results on Jan 24.
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 >>
See More Zacks Research for These Tickers
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Citizens Financial (CFG) Q4 Earnings: A Beat in Store?
We expect Citizens Financial Group, Inc. (CFG - Free Report) to beat earnings expectations when it reports fourth-quarter 2016 results, before the opening bell on Jan 20.
Why a Likely Positive Surprise?
Our proven model shows that Citizens Financial has the right combination of two key ingredients to beat earnings.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at +3.85%. This is a very significant and leading indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank #2 (Buy): Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Citizens Financial’s Zacks Rank #2 and ESP of +3.85% makes us confident of an earnings beat.
Further, the company boasts an impressive earnings surprise history as depicted in the chart below:
Citizens Financial Group, Inc. Price and EPS Surprise
Citizens Financial Group, Inc. Price and EPS Surprise | Citizens Financial Group, Inc. Quote
Regarding the stock’s performance, shares of the company surged 62.6% over the past one year, outperforming 39.3% growth for the Zacks categorized Savings and Loans Industry.
What to Expect in Q4?
Muted growth in net interest income, margin pressure lingers: While management expects average loan growth of around 1.5–2% on a sequential basis, we do not expect significant improvement in net-interest income amid the low-rate environment. Though rise in the 10-year Treasury yield since Nov 8, 2016 is anticipated to alleviate pressure on the net interest margin (NIM) to some extent, the favorable influence on NIM is not likely to occur in the quarter.
Increase in expenses: Management projects a modest rise in expenses, on a sequential basis, due to seasonality. However, the company expects to generate positive operating leverage.
Provisions to trend high: While broader credit trends are anticipated to remain favorable, provisions may reflect moderate growth, due to increase in loans. Within the energy portfolio, the company estimates a slight migration to net charge-offs and non-performing loans. However, for its commercial and retail portfolios, credit metrics are predicted to improve in the fourth quarter. In addition, for the auto portfolio, credit losses are expected to normalize and stay in the 70-basis points range.
Fee income to exhibit strength: On a positive note, non-interest income might get a lift owing to Citizens Financial’s ongoing initiatives to boost its several capabilities. Notably, the company expects stable non-interest income with the consistent robust performance of capital markets. However, compared with the third-quarter levels, mortgage fees are expected to be lower.
However, activities of Citizens Financial during the quarter to be reported were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 52 cents over the last seven days. Notably, the estimated figure represents year-over-year growth of 25%.
Stocks That Warrant a Look
Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
KeyCorp (KEY - Free Report) has an earnings ESP of +6.90% and a Zacks Rank #2. It is scheduled to report fourth-quarter results on Jan 19. You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings ESP for Citigroup Inc. (C - Free Report) is +1.79% and it carries a Zacks Rank #2. The company is expected to release fourth-quarter results on Jan 18.
Fifth Third Bancorp (FITB - Free Report) has an earnings ESP of +2.33% and a Zacks Rank #1. It is slated to report fourth-quarter results on Jan 24.
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 >>