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What's in the Cards for Fifth Third (FITB) in Q1 Earnings?

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Fifth Third Bancorp (FITB - Free Report) is expected to report first-quarter 2017 results, before the opening bell on Apr 25.

The company delivered a positive earnings surprise of 11.6% in fourth-quarter 2016. Earnings per share surpassed the Zacks Consensus Estimate by 5 cents. Lower expenses and higher net interest income, partially offset by lower fee income, drove the earnings beat.

Further, the company boasts an impressive earnings surprise history. It topped earnings in all the trailing four quarters with an average positive earnings surprise of 21.8%.

Fifth Third Bancorp Price and EPS Surprise

Earnings Whispers

According to our quantitative model, we cannot conclusively predict earnings beat for Fifth Third in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen, but that’s not the case with Fifth Third. 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 Fifth Third is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 38 cents.

Zacks Rank: Fifth Third currently carries a Zacks Rank #3. This increases the predictive power of ESP but we need to have positive ESP to be reasonably confident of an earnings beat.

Factors to Influence Q1 Results

Expenses to Trend Higher: Expenses are expected to trend upward in the upcoming release due to Fifth Third’s ongoing strategic investments in several areas including technology. Also, the company’s branch digitization initiatives will keep the expenses under pressure.

Sluggish Loan Growth: Impacted by Trump’s monetary policy uncertainties, overall loan growth is anticipated to be slow in the to-be-reported quarter. This will keep the net interest income under pressure despite the improved interest rate scenario.

Pressure on Net Interest Margin (NIM) to Alleviate: Persistently low rate environment kept the bank’s margins under pressure over the past several quarters, but the latest interest rate hikes might alleviate some improvement in NIM. Management expects NIM expansion of 8–9 basis points from the last quarter.

Lower Fee Income to Impact Revenues: Fifth Third’s non-interest income might get negatively impacted as management anticipates mortgage origination revenues in the first quarter to decline 10–15% year over year.  

Fifth Third’s activities during the quarter led to positive estimate revisions. The Zacks Consensus Estimate increased slightly to 38 cents, over the last seven days.

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.

UMB Financial Corporation (UMBF - Free Report) is scheduled to report first-quarter results on Apr 26. It has an Earnings ESP of +2.38% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Prosperity Bancshares, Inc. (PB - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 26.

The Earnings ESP for Moody’s Corporation (MCO - Free Report) is +4.17% and it carries a Zacks Rank #2. The company is scheduled to release first-quarter results on May 5.

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