Back to top

Image: Bigstock

Is a Beat in Store for Huntington (HBAN) in Q1 Earnings?

Read MoreHide Full Article

Huntington Bancshares Incorporated (HBAN - Free Report) is scheduled to report first-quarter 2017 results on Apr 19, before the market opens.

The Columbus, OH-based bank’s fourth-quarter 2016 reported a positive earnings surprise of 9.1%, beating the Zacks Consensus Estimate. Results displayed growth in revenues. Also, the quarter witnessed continual growth in both loan and deposit balances, along with a strong capital position. However, elevated expenses and higher provision for credit losses acted as headwinds.

Huntington recorded an average positive earnings surprise of 3.46% over the trailing four quarters.
 

Shares of Huntington gained 31.6% over the past six months, underperforming growth of 21.4% recorded by the Zacks categorized Banks – Midwest industry.

Let’s see how things have shaped up prior to this announcement.

Factors to Influence Q1 Results

Revenues to Grow: Revenues are expected to grow in line with the company’s long-term financial goals, including the synergies of the FirstMerit acquisition.

Pressure on Net Interest Margin (NIM) Might Ease: Though the prolonged low-rate environment has taken a toll on the bank’s margins over the past several quarters, the Fed’s recent rate hike for the third time since the financial crisis, and its commitment to raise rates faster (two more times) this year, based on a convincing pace of economic growth, should help banks get rid of shrinking margins.

Credit Quality to Normalize: Overall, credit quality is expected to remain at the current levels. However, in the quarter to be reported, moderate volatility can be recorded given the reduction in problem assets and credit costs, and volatility in the commodities and currency market. Notably, the loan loss provisions are expected to gradually normalize and net charge-offs are likely to remain below the long-term target range of 35–55 basis points.

Expenses under Control: Though management remains focused on expense management, we remain apprehensive due to the company’s continuous investments in the business. Huntington anticipates annualized cost savings of $255 million related to the acquisition of FirstMerit Corporation. Moreover, there were no major outflows related to legal settlements that might impact the firm’s earnings unusually in the to-be-reported quarter.

Huntington’s activities during the quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 22 cents over the last seven days.

Earnings Whispers

Our proven model does not conclusively show that Huntington is likely to beat on the Zacks Consensus Estimate in the first quarter. This is because 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) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  The Earnings ESP for Huntington is 0.00%. This is because the Most Accurate estimate of 22 cents comes in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks That Warrant a Look

Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.

BB&T Corporation has an Earnings ESP of +4.29% and a Zacks Rank #3. It is scheduled to report first-quarter 2017 results on Apr 20. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for T. Rowe Price Group, Inc. (TROW - Free Report) is +0.84% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on Apr 25.

UMB Financial Corporation (UMBF - Free Report) has an Earnings ESP of +1.19% and a Zacks Rank #2. It is slated to report first-quarter results on Apr 26.

5 Trades Could Profit "Big-League" from Trump Policies

If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.

Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Huntington Bancshares Incorporated (HBAN) - free report >>

T. Rowe Price Group, Inc. (TROW) - free report >>

UMB Financial Corporation (UMBF) - free report >>

Published in