It has been about a month since the last earnings report for Hancock Holding Company . Shares have added about 5.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hancock Beats Q4 Earnings Estimates, Revenues Up
Hancock reported fourth-quarter 2016 earnings of $0.64 per share, surpassing the Zacks Consensus Estimate of $0.61. Further, the reported figure is significantly higher than $0.19 per share earnings recorded in the prior-year quarter.
Better-than-expected results were primarily driven by an improvement in total revenues. Also, growth in loans and deposits continued to be strong. Further, an improvement in profitability and capital ratios acted as tailwinds. Additionally an energy-led fall in provisions helped release the burden to some extent.
Nevertheless, higher expenses and a rise in non-performing assets remained the undermining factors.
Net income for the quarter came in at $51.8 million, up significantly from the prior-year quarter.
The company reported full-year earnings per share of $1.87, up 14% year over year. However, the figure missed the Zacks Consensus Estimate of $1.89 per share. Also, 2016 net income came in at $149.3 million, up 13.6% from the prior year.
Revenue Growth Offsets Higher Expenses
Hancock’s net revenue for the quarter summed $233.7 million, up 7.2% year over year. However, it lagged the Zacks Consensus Estimate of $234.8 million.
Net revenue for 2016 came in at $909.9 million, which lagged the Zacks Consensus Estimate of $929.3 million. However, the figure represents a rise of 5.5% from the prior year.
Quarterly net interest income grew 5.9% year over year to $167.8 million. Also, reported net interest margin (NIM) rose 5 basis points from the prior-year quarter to 3.26%.
Non-interest income totaled $65.9 million, up 10.5% from the year-ago quarter. The growth was driven by an improvement in all the components, except insurance commissions and fees, service charges on deposit accounts, and investment and annuity fees.
Total operating expenses increased marginally year over year to $156.3 million. The rise was primarily due to higher personnel and other operating expenses.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.50% of average total loans, up from 0.21% in the year-ago quarter. Also, total nonperforming assets surged 97.1% year over year to $376.7 million.
However, provision for loan losses declined 71.2% year over year to $14.5 million thanks to the rebound in oil prices, which somewhat eased the concern related to the stressed energy sector.
Strong Balance Sheet; Profitability & Capital Ratios Improve
As of Dec 31, 2016, total loans grew 4.2% sequentially to $16.8 billion. Further, total deposits rose 2.9% from the prior month to $19.4 billion.
Return on average assets was 0.88%, up from 0.27% as of Dec 31, 2015. Moreover, as of Dec 31, 2016, return on average common equity was 8.19% compared with 2.48% as of Dec 31, 2015.
As of Dec 31, 2016, Tier 1 leverage ratio was 9.56%, up from 8.55% as of Dec 31, 2015. Further, Tier 1 risk-based capital ratio came in at 11.28%, up from 9.96% as of Dec 31, 2015.
First quarter 2017 Outlook (Excludes impact of First NBC transaction)
Management expects potential pay-downs in the energy portfolio. Notably, net loan growth is expected to be around $150-200 million, despite the first quarter being seasonally regarded as the lowest growth quarter of the year.
Regarding revenues, growth in net interest income is expected to be partially offset by flat to lower levels on non-interest income.
Core NIM is expected to rise in the range of 3 to 5 basis points on the assuming the absence of additional rate hikes.
Management expects the non-interest expenses to be almost stable sequentially as non-recurring items are expected to be replaced by benefits and payroll taxes.
Management expects loan loss provision to be in the band of $12 million to $16 million in the first quarter.
The company expects return to its historical effective tax rate in the range of 25-27% in 2017 assuming no changes in the tax code, which is made on account of the presidential elections.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. While looking back an additional 30 days, we can see even more upward momentum. There have been two upward revisions in the last two months.
VGM Scores
At this time, Hancock' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value, based on our styles scores.
Outlook
The stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
Image: Bigstock
Why Is Hancock (HBHC) Up 5.4% Since the Last Earnings Report?
It has been about a month since the last earnings report for Hancock Holding Company . Shares have added about 5.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hancock Beats Q4 Earnings Estimates, Revenues Up
Hancock reported fourth-quarter 2016 earnings of $0.64 per share, surpassing the Zacks Consensus Estimate of $0.61. Further, the reported figure is significantly higher than $0.19 per share earnings recorded in the prior-year quarter.
Better-than-expected results were primarily driven by an improvement in total revenues. Also, growth in loans and deposits continued to be strong. Further, an improvement in profitability and capital ratios acted as tailwinds. Additionally an energy-led fall in provisions helped release the burden to some extent.
Nevertheless, higher expenses and a rise in non-performing assets remained the undermining factors.
Net income for the quarter came in at $51.8 million, up significantly from the prior-year quarter.
The company reported full-year earnings per share of $1.87, up 14% year over year. However, the figure missed the Zacks Consensus Estimate of $1.89 per share. Also, 2016 net income came in at $149.3 million, up 13.6% from the prior year.
Revenue Growth Offsets Higher Expenses
Hancock’s net revenue for the quarter summed $233.7 million, up 7.2% year over year. However, it lagged the Zacks Consensus Estimate of $234.8 million.
Net revenue for 2016 came in at $909.9 million, which lagged the Zacks Consensus Estimate of $929.3 million. However, the figure represents a rise of 5.5% from the prior year.
Quarterly net interest income grew 5.9% year over year to $167.8 million. Also, reported net interest margin (NIM) rose 5 basis points from the prior-year quarter to 3.26%.
Non-interest income totaled $65.9 million, up 10.5% from the year-ago quarter. The growth was driven by an improvement in all the components, except insurance commissions and fees, service charges on deposit accounts, and investment and annuity fees.
Total operating expenses increased marginally year over year to $156.3 million. The rise was primarily due to higher personnel and other operating expenses.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.50% of average total loans, up from 0.21% in the year-ago quarter. Also, total nonperforming assets surged 97.1% year over year to $376.7 million.
However, provision for loan losses declined 71.2% year over year to $14.5 million thanks to the rebound in oil prices, which somewhat eased the concern related to the stressed energy sector.
Strong Balance Sheet; Profitability & Capital Ratios Improve
As of Dec 31, 2016, total loans grew 4.2% sequentially to $16.8 billion. Further, total deposits rose 2.9% from the prior month to $19.4 billion.
Return on average assets was 0.88%, up from 0.27% as of Dec 31, 2015. Moreover, as of Dec 31, 2016, return on average common equity was 8.19% compared with 2.48% as of Dec 31, 2015.
As of Dec 31, 2016, Tier 1 leverage ratio was 9.56%, up from 8.55% as of Dec 31, 2015. Further, Tier 1 risk-based capital ratio came in at 11.28%, up from 9.96% as of Dec 31, 2015.
First quarter 2017 Outlook (Excludes impact of First NBC transaction)
Management expects potential pay-downs in the energy portfolio. Notably, net loan growth is expected to be around $150-200 million, despite the first quarter being seasonally regarded as the lowest growth quarter of the year.
Regarding revenues, growth in net interest income is expected to be partially offset by flat to lower levels on non-interest income.
Core NIM is expected to rise in the range of 3 to 5 basis points on the assuming the absence of additional rate hikes.
Management expects the non-interest expenses to be almost stable sequentially as non-recurring items are expected to be replaced by benefits and payroll taxes.
Management expects loan loss provision to be in the band of $12 million to $16 million in the first quarter.
The company expects return to its historical effective tax rate in the range of 25-27% in 2017 assuming no changes in the tax code, which is made on account of the presidential elections.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. While looking back an additional 30 days, we can see even more upward momentum. There have been two upward revisions in the last two months.
Hancock Holding Company Price and Consensus
Hancock Holding Company Price and Consensus | Hancock Holding Company Quote
VGM Scores
At this time, Hancock' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value, based on our styles scores.
Outlook
The stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.