Huntington Bancshares (HBAN - Free Report) is slated to report first-quarter 2021 results on Apr 22, before the opening bell. The company’s revenues and earnings are expected to have improved year over year.
In the last reported quarter, the bank’s earnings missed the Zacks Consensus Estimate. Higher credit provisioning and elevated expenses were the undermining factors. However, increase in revenues aided by high net interest and non-interest income supported the results.
The Zacks Consensus Estimate for first-quarter earnings of 33 cents indicates substantial growth from the year-ago reported number. Also, the consensus estimate for sales of $1.23 billion suggests a rise of 6% year over year.
Key Factors at Play
Soft Net Interest Income (NII) Growth: The overall lending scenario was muted during the quarter, with commercial, industrial and real estate loan portfolios unlikely to have offered support. Also, as consumer sentiments remained subdued amid the coronavirus crisis, demand for consumer loans declined.
Further, the near-zero interest rates are likely to have hurt Huntington’s NII in the first quarter. This is likely to have resulted in a contraction in NIM.
Nevertheless, low deposit costs, steepening of the yield curve and higher average interest earning assets might have been offsetting factors. The Zacks Consensus Estimate for average interest earning assets of $112.8 billion for the quarter implies a nearly 10.8% year-over-year improvement.
The consensus estimate for NII (tax equivalent basis) indicates a 4.5% rise to $832 million.
High Non-Interest Revenues: Low mortgage rates during the quarter continued to fuel demand for refinancing and loan originations, thereby leading to higher mortgage banking income. The Zacks Consensus Estimate for same is pegged at $78 million, suggesting 34.5% growth.
Also, rise in deposits in the quarter is expected to have driven fees from service charge on deposits. Improved consumer spending is likely to have supported the company’s card fees. The Zacks Consensus Estimate for cards and payment processing revenues of $65 million suggests a 12.1% rise from the prior-year quarter. Further, the consensus estimate for insurance income is pegged at $25 million, indicating 8.7% growth.
Moreover, a substantial rise in client activity and higher market volatility supported trading revenues during the to-be-reported quarter. Investment banking performance also remained impressive due to strong equity markets. Thus, the company’s capital markets fees are likely to have witnessed growth. The Zacks Consensus Estimate of $35.4 million for the same suggests a 7.2% rise from the prior quarter.
Overall, the consensus mark for non-interest income of $398 million indicates a 10.2% year-over-year growth.
High Expenses: Despite expense control initiatives, investments in technology and marketing, as well as the return of customer and sales activity closer to pre pandemic levels, are likely to have resulted in higher expenses.
Asset Quality: Having built significant reserves in 2020 and considering the improvement in economic scenario, Huntington is likely to have released some provision for loan losses in the first quarter.
Further, non-performing loans might have declined. The Zacks Consensus Estimate for same of $525 million indicates fall of 10.4% from the prior-year quarter.
What Our Quantitative Model Reveals
Huntington has 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 Huntington is +1.73%.
Zacks Rank: Huntington currently sports a Zacks Rank of 3.
Other Banks Worth a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
T. Rowe Price Group (TROW - Free Report) is scheduled to release earnings on Apr 29. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +0.57%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for New York Community Bancorp (NYCB - Free Report) is +2.02% and it carries a Zacks Rank #2 at present. The company is slated to report quarterly numbers on Apr 28.
Carlyle Group (CG - Free Report) is slated to report quarterly results on Apr 29. The company currently has an Earnings ESP of +3.12% and a Zacks Rank of 3.
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Huntington Bancshares (HBAN - Free Report) is slated to report first-quarter 2021 results on Apr 22, before the opening bell. The company’s revenues and earnings are expected to have improved year over year.
In the last reported quarter, the bank’s earnings missed the Zacks Consensus Estimate. Higher credit provisioning and elevated expenses were the undermining factors. However, increase in revenues aided by high net interest and non-interest income supported the results.
The Zacks Consensus Estimate for first-quarter earnings of 33 cents indicates substantial growth from the year-ago reported number. Also, the consensus estimate for sales of $1.23 billion suggests a rise of 6% year over year.
Key Factors at Play
Soft Net Interest Income (NII) Growth: The overall lending scenario was muted during the quarter, with commercial, industrial and real estate loan portfolios unlikely to have offered support. Also, as consumer sentiments remained subdued amid the coronavirus crisis, demand for consumer loans declined.
Further, the near-zero interest rates are likely to have hurt Huntington’s NII in the first quarter. This is likely to have resulted in a contraction in NIM.
Nevertheless, low deposit costs, steepening of the yield curve and higher average interest earning assets might have been offsetting factors. The Zacks Consensus Estimate for average interest earning assets of $112.8 billion for the quarter implies a nearly 10.8% year-over-year improvement.
The consensus estimate for NII (tax equivalent basis) indicates a 4.5% rise to $832 million.
High Non-Interest Revenues: Low mortgage rates during the quarter continued to fuel demand for refinancing and loan originations, thereby leading to higher mortgage banking income. The Zacks Consensus Estimate for same is pegged at $78 million, suggesting 34.5% growth.
Also, rise in deposits in the quarter is expected to have driven fees from service charge on deposits. Improved consumer spending is likely to have supported the company’s card fees. The Zacks Consensus Estimate for cards and payment processing revenues of $65 million suggests a 12.1% rise from the prior-year quarter. Further, the consensus estimate for insurance income is pegged at $25 million, indicating 8.7% growth.
Moreover, a substantial rise in client activity and higher market volatility supported trading revenues during the to-be-reported quarter. Investment banking performance also remained impressive due to strong equity markets. Thus, the company’s capital markets fees are likely to have witnessed growth. The Zacks Consensus Estimate of $35.4 million for the same suggests a 7.2% rise from the prior quarter.
Overall, the consensus mark for non-interest income of $398 million indicates a 10.2% year-over-year growth.
High Expenses: Despite expense control initiatives, investments in technology and marketing, as well as the return of customer and sales activity closer to pre pandemic levels, are likely to have resulted in higher expenses.
Asset Quality: Having built significant reserves in 2020 and considering the improvement in economic scenario, Huntington is likely to have released some provision for loan losses in the first quarter.
Further, non-performing loans might have declined. The Zacks Consensus Estimate for same of $525 million indicates fall of 10.4% from the prior-year quarter.
What Our Quantitative Model Reveals
Huntington has 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 Huntington is +1.73%.
Zacks Rank: Huntington currently sports a Zacks Rank of 3.
Other Banks Worth a Look
Here are a few other bank stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
T. Rowe Price Group (TROW - Free Report) is scheduled to release earnings on Apr 29. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +0.57%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for New York Community Bancorp (NYCB - Free Report) is +2.02% and it carries a Zacks Rank #2 at present. The company is slated to report quarterly numbers on Apr 28.
Carlyle Group (CG - Free Report) is slated to report quarterly results on Apr 29. The company currently has an Earnings ESP of +3.12% and a Zacks Rank of 3.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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