The backdrop has been tough for U.S. banks since the beginning of the year. Industry wide weakness and global concerns were further fueled by the recent Brexit referendum. As such, banks have already been struggling with revenue pressure amid persistently low environment and heightened regulatory pressure.
Nevertheless, market sentiments lifted as some of the major banking giants beat earnings expectations in the second quarter, signaling a potentially better picture for the industry as a whole this season.
Per our latest Earnings Preview article, overall earnings for the Finance sector in second-quarter 2016 are expected to be down 3.3% year over year. Also, revenues are expected to be down 0.5%. Notably, during the first quarter the sector reflected a 6.9% decline in earnings while revenues improved 3.3%.
With most of the companies set to release results, let’s have a look at what’s in store for the following firms, releasing results on Jul 20, before the opening bell.
M&T Bank Corporation (MTB - Free Report) : Results of the Buffalo, N.Y.-based banking giant should reflect growth in net interest income driven by loan growth including the favorable impact from the Hudson City merger. Also, non interest income should get a boost owing to seasonally higher mortgage banking revenues.
We expect M&T Bank to beat earnings expectations as our proven model shows that the company has the right combination two key components – Zacks Rank #3 (Hold) and Earnings ESP of +0.48%. Also, the Zacks Consensus Estimate of $2.08 for the quarter was revised upwards 0.4% over the last 7 days.
Notably, the earnings surprise history for M&T Bank has been decent.
Northern Trust Corporation (NTRS - Free Report) : The company derives a significant part of its revenues from trust, investment and other servicing fees. These fees are highly dependent on the market value of clients’ assets under custody, which, in turn, is directly linked to the performance of equity markets. Notably, Northern Trust’s calculation of these fees considers a lag effect, i.e., the computations are based on prior quarter-end valuations. As the first-quarter 2016 experienced weak equity markets, the company is not likely to record higher custody, servicing and management fees.
However, the company’s revenues should get a lift from higher foreign exchange trading revenues due to increase in volatility in the second quarter on a sequential basis. (Read more: Northern Trust Earnings: Will It Disappoint in Q2?)
Over the last 30 days, the Zacks Consensus Estimate for the company remained stable at $1.05 per share for the upcoming release. Further, the company has a Zacks Rank #4 (Sell) with an Earnings ESP of -0.95%, making it difficult to conclusively predict an earnings beat this quarter.
Notably, the company does not hold a track of solid earnings surprise history.
BankUnited, Inc. (BKU - Free Report) : Higher expenses may affect the company’s profitability in the second quarter, to some extent. Also, the Miami Lakes, FL-based bank has been experiencing declining margins. Amid the still low rate environment, the company is not likely to exhibit improvement in margin. However, continued loan growth should support net interest income to some extent.
Estimates have been falling lately prior to the BankUnited's second quarter earnings release. The Zacks Consensus Estimate of 51 cents declined nearly 2% over the past 30 days. Also, the company holds a Zacks Rank #4 along with an Earnings ESP of -1.96%, making it difficult to conclusively predict an earnings beat this quarter.
The company posted an average earnings surprise of 2.1% over the trailing four quarters.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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 >>
The backdrop has been tough for U.S. banks since the beginning of the year. Industry wide weakness and global concerns were further fueled by the recent Brexit referendum. As such, banks have already been struggling with revenue pressure amid persistently low environment and heightened regulatory pressure.
Nevertheless, market sentiments lifted as some of the major banking giants beat earnings expectations in the second quarter, signaling a potentially better picture for the industry as a whole this season.
Per our latest Earnings Preview article, overall earnings for the Finance sector in second-quarter 2016 are expected to be down 3.3% year over year. Also, revenues are expected to be down 0.5%. Notably, during the first quarter the sector reflected a 6.9% decline in earnings while revenues improved 3.3%.
With most of the companies set to release results, let’s have a look at what’s in store for the following firms, releasing results on Jul 20, before the opening bell.
M&T Bank Corporation (MTB - Free Report) : Results of the Buffalo, N.Y.-based banking giant should reflect growth in net interest income driven by loan growth including the favorable impact from the Hudson City merger. Also, non interest income should get a boost owing to seasonally higher mortgage banking revenues.
We expect M&T Bank to beat earnings expectations as our proven model shows that the company has the right combination two key components – Zacks Rank #3 (Hold) and Earnings ESP of +0.48%. Also, the Zacks Consensus Estimate of $2.08 for the quarter was revised upwards 0.4% over the last 7 days.
Notably, the earnings surprise history for M&T Bank has been decent.
Northern Trust Corporation (NTRS - Free Report) : The company derives a significant part of its revenues from trust, investment and other servicing fees. These fees are highly dependent on the market value of clients’ assets under custody, which, in turn, is directly linked to the performance of equity markets. Notably, Northern Trust’s calculation of these fees considers a lag effect, i.e., the computations are based on prior quarter-end valuations. As the first-quarter 2016 experienced weak equity markets, the company is not likely to record higher custody, servicing and management fees.
However, the company’s revenues should get a lift from higher foreign exchange trading revenues due to increase in volatility in the second quarter on a sequential basis. (Read more: Northern Trust Earnings: Will It Disappoint in Q2?)
Over the last 30 days, the Zacks Consensus Estimate for the company remained stable at $1.05 per share for the upcoming release. Further, the company has a Zacks Rank #4 (Sell) with an Earnings ESP of -0.95%, making it difficult to conclusively predict an earnings beat this quarter.
Notably, the company does not hold a track of solid earnings surprise history.
BankUnited, Inc. (BKU - Free Report) : Higher expenses may affect the company’s profitability in the second quarter, to some extent. Also, the Miami Lakes, FL-based bank has been experiencing declining margins. Amid the still low rate environment, the company is not likely to exhibit improvement in margin. However, continued loan growth should support net interest income to some extent.
Estimates have been falling lately prior to the BankUnited's second quarter earnings release. The Zacks Consensus Estimate of 51 cents declined nearly 2% over the past 30 days. Also, the company holds a Zacks Rank #4 along with an Earnings ESP of -1.96%, making it difficult to conclusively predict an earnings beat this quarter.
The company posted an average earnings surprise of 2.1% over the trailing four quarters.
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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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