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Will LendingClub (LC) Disappoint Investors in Q1 Earnings?
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LendingClub Corporation (LC - Free Report) is slated to announce first-quarter 2017 results on May 4, after market close.
The company reported narrower-than-expected loss in the last quarter despite witnessing higher expenses and marginal decline in revenues. With limited impact of the results, the stock gained 1.3% in the recently completed quarter.
LendingClub’s earnings surprise history doesn’t look impressive either. While the company beat estimates in two of the trailing four quarters and matched in one, dismal performance in the remaining quarter led to an average negative surprise of 27.2%.
According to our proven model, chances of LendingClub beating the Zacks Consensus Estimate are slim in the upcoming report. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here, as is elaborated below.
(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 LendingClub is -11.11%. This is because the Most Accurate Estimate is a loss of 10 cents and the Zacks Consensus Estimate is a loss of 9 cents.
Zacks Rank: LendingClub’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive Earnings ESP to be confident of an earnings beat.
Notably, the Zacks Consensus Estimate of a loss of 9 cents remained unchanged in the last seven days.
Factors to Influence Q1 Results
LendingClub’s primary source of revenues is transaction fees on loans that it helps to issue and subsequently lists online for investors to fund. Since loan originations in the quarter were not very impressive, we don’t expect transaction fees to significantly contribute to it revenues.
However, the company’s investments in channel diversification and ability to offer affordable credit to a wide spectrum of borrowers should continue to support overall revenue growth.
Nevertheless, several challenges continue to plague the online lending sector. These include venture capital funding, interest rate risk and the regulatory landscape. These are likely to have an adverse impact on LendingClub’s top-line growth.
Management projects total net revenues in the range of $117–$122 million for the upcoming release. After considering the valuation adjustment and credit tightening, this estimate is in line with prior-quarter results.
The company incurs significant expenditure for selling and marketing its products. For the first quarter, LendingClub projects adjusted loss before interest, tax, depreciation and amortization in the range of $5–$10 million. This compares unfavorably with the prior-year quarter’s adjusted EBITDA of $25.2 million.
Management expects net loss in the range of $38-$43 million for the quarter, which compares unfavorably with the year ago earnings $4.1 million.
Stocks that Warrant a Look
Here are some finance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Ocwen Financial Corporation (OCN - Free Report) is slated to come up with results on May 3. The company has an Earnings ESP of +18.18% and a Zacks Rank #3.
Banco de Chile (BCH - Free Report) has an Earnings ESP of +0.74% and a Zacks Rank #2. It is expected to report results on May 8.
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Will LendingClub (LC) Disappoint Investors in Q1 Earnings?
LendingClub Corporation (LC - Free Report) is slated to announce first-quarter 2017 results on May 4, after market close.
The company reported narrower-than-expected loss in the last quarter despite witnessing higher expenses and marginal decline in revenues. With limited impact of the results, the stock gained 1.3% in the recently completed quarter.
LendingClub’s earnings surprise history doesn’t look impressive either. While the company beat estimates in two of the trailing four quarters and matched in one, dismal performance in the remaining quarter led to an average negative surprise of 27.2%.
LendingClub Corporation Price and EPS Surprise
LendingClub Corporation Price and EPS Surprise | LendingClub Corporation Quote
Earnings Whispers
According to our proven model, chances of LendingClub beating the Zacks Consensus Estimate are slim in the upcoming report. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here, as is elaborated below.
(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 LendingClub is -11.11%. This is because the Most Accurate Estimate is a loss of 10 cents and the Zacks Consensus Estimate is a loss of 9 cents.
Zacks Rank: LendingClub’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive Earnings ESP to be confident of an earnings beat.
Notably, the Zacks Consensus Estimate of a loss of 9 cents remained unchanged in the last seven days.
Factors to Influence Q1 Results
LendingClub’s primary source of revenues is transaction fees on loans that it helps to issue and subsequently lists online for investors to fund. Since loan originations in the quarter were not very impressive, we don’t expect transaction fees to significantly contribute to it revenues.
However, the company’s investments in channel diversification and ability to offer affordable credit to a wide spectrum of borrowers should continue to support overall revenue growth.
Nevertheless, several challenges continue to plague the online lending sector. These include venture capital funding, interest rate risk and the regulatory landscape. These are likely to have an adverse impact on LendingClub’s top-line growth.
Management projects total net revenues in the range of $117–$122 million for the upcoming release. After considering the valuation adjustment and credit tightening, this estimate is in line with prior-quarter results.
The company incurs significant expenditure for selling and marketing its products. For the first quarter, LendingClub projects adjusted loss before interest, tax, depreciation and amortization in the range of $5–$10 million. This compares unfavorably with the prior-year quarter’s adjusted EBITDA of $25.2 million.
Management expects net loss in the range of $38-$43 million for the quarter, which compares unfavorably with the year ago earnings $4.1 million.
Stocks that Warrant a Look
Here are some finance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Ocwen Financial Corporation (OCN - Free Report) is slated to come up with results on May 3. The company has an Earnings ESP of +18.18% and a Zacks Rank #3.
Moody's Corporation (MCO - Free Report) is expected to report results on May 5. It has an Earnings ESP of +7.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Banco de Chile (BCH - Free Report) has an Earnings ESP of +0.74% and a Zacks Rank #2. It is expected to report results on May 8.
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 >>