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What to Expect From BGC Partners (BGCP) in Q4 Earnings?

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BGC Partners, Inc. is slated to report fourth quarter and 2018 results on Feb 14, before the market opens.

In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate. Results were adversely impacted by higher expenses, which was partially offset by revenue growth.

BGC Partners has an impressive earnings surprise history. Its surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 8%.

BGC Partners, Inc. Price and EPS Surprise

 

BGC Partners, Inc. Price and EPS Surprise | BGC Partners, Inc. Quote

Nonetheless, activities of the company in the fourth quarter failed to encourage analysts. As a result, the consensus estimate for earnings of 16 cents has remained unchanged over the past 30 days.

Factors to Influence Q4 Results

This will be the first quarterly results for BGC Partners post the spinoff of Newmark Group, Inc. (NMRK - Free Report) in November 2018. In December, management had provided updated fourth quarter and full-year 2018 guidance.

For the fourth quarter, BGC Partners expects pre-tax adjusted earnings to be in the range of $80-$92 million, an increase of 38-59% year over year. Revenues are projected to be in the $445-$475 million range, up 3-10%.

Further, revenues are expected to be impacted by seasonality. The company’s results will also be adversely impacted by unexpected market closure on Dec 5, significant market volatility experienced during the fourth quarter and strengthening of the dollar.  

On the cost front, though the company hasn’t provided any outlook, we expect expenses to rise, given the increase in compensation costs and charges related to the Newmark Group spinoff.

For 2018, the company projects pre-tax adjusted earnings to grow in the range of 29.5-33.5% and revenues to increase 9.5-11.5%. Further, adjusted earnings effective tax will be in the band of 11-11.8%.

Earnings Whispers

Here’s what our quantitative model predicts:

The chances of BGC Partners beating the Zacks Consensus Estimate in the fourth quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for BGC Partners is 0.00%.

Zacks Rank: BGC Partners currently has a Zacks Rank #5 (Strong Sell), which further lowers the predictive power of ESP.

Stocks to Consider

Here are a few finance stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Bank of Montreal (BMO - Free Report) is slated to release results on Feb 26. The company has an Earnings ESP of +0.30% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of Nova Scotia (BNS - Free Report) is scheduled to release results on Feb 26. It has an Earnings ESP of +0.89% and carries a Zacks Rank #3.

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Bank of Nova Scotia (The) (BNS) - free report >>

Newmark Group, Inc. (NMRK) - free report >>

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