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Fee Income to Support People's United (PBCT) Q3 Earnings
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People's United Financial, Inc. is scheduled to report third-quarter 2020 results on Oct 22. While its revenues are expected to have improved year over year, earnings might have declined.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
In second-quarter 2020 the company’s earnings matched Zacks Consensus Estimate. Improvement in loan balances and higher revenues were offset by elevated expenses.
The company surpassed estimates on three occasions and posted in-line results in one of the trailing four quarters, with the positive surprise being 16.29%, on average.
Peoples United Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 28 cents, which suggests a fall of 17.7% from the year-ago reported number. However, the consensus estimate for sales of $498.6 million indicates 9.7% growth.
Factors at Play
Muted Loan Growth: During the quarter, the overall lending scenario was weak, with demand for commercial and industrial loans (accounting for roughly 74% of People's United’s average loan balances) witnessing a marked decline.
Lower Net Interest Income (NII): The Zacks Consensus Estimate for average earning assets of $53.6 billion for the quarter indicates 1% sequential fall. Further, a muted loan demand during the quarter might have impacted NII.
Also, a cut in interest rates to near-zero to protect the economy from the impacts of the coronavirus outbreak is likely to have hurt the company’s net interest margin, thereby, affecting NII.
The Zacks Consensus Estimate of $401 million for NII suggests a 1.2% decline on a sequential basis.
Fee Income Growth: Gradual resumption of economic activities in the quarter is likely to have supported fee income. The Zacks Consensus Estimate for bank service charges is $26.53 million, suggesting 30.7% year-over-year growth, while that for income from insurance is pegged at $9.7 million, indicating a 7.8% rise from the year-ago reported figure.
Also, given the strength in equity markets, the assets price increased. This is likely to have led to higher investment management fees for People’s United. The consensus estimate for the same of $79.8 million suggests 2.5% rise sequentially. Likewise, the Zacks Consensus Estimate for cash management fees of $8.13 million for the quarter indicates a slight rise from the prior quarter.
The consensus estimate for non-interest income stands at $97 million, indicating a 7.8% sequential rise.
Higher Expenses: People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have risen.
Earnings Whispers
The chances of People’s United beating the Zacks Consensus Estimate in the third 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 People’s United is -4.57%.
Zacks Rank: People’s United currently has a Zacks Rank #3.
BankUnited, Inc. (BKU - Free Report) is set to release quarterly results on Oct 28. The company currently has an Earnings ESP of +6.10% and a Zacks Rank of 3.
The Earnings ESP for Affiliated Managers Group, Inc. (AMG - Free Report) is +0.15% and the company presently carries a Zacks Rank #3. It is scheduled to report quarterly numbers on Oct 26.
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Fee Income to Support People's United (PBCT) Q3 Earnings
People's United Financial, Inc. is scheduled to report third-quarter 2020 results on Oct 22. While its revenues are expected to have improved year over year, earnings might have declined.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
In second-quarter 2020 the company’s earnings matched Zacks Consensus Estimate. Improvement in loan balances and higher revenues were offset by elevated expenses.
The company surpassed estimates on three occasions and posted in-line results in one of the trailing four quarters, with the positive surprise being 16.29%, on average.
Peoples United Financial, Inc. Price and EPS Surprise
Peoples United Financial, Inc. price-eps-surprise | Peoples United Financial, Inc. Quote
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 28 cents, which suggests a fall of 17.7% from the year-ago reported number. However, the consensus estimate for sales of $498.6 million indicates 9.7% growth.
Factors at Play
Muted Loan Growth: During the quarter, the overall lending scenario was weak, with demand for commercial and industrial loans (accounting for roughly 74% of People's United’s average loan balances) witnessing a marked decline.
Lower Net Interest Income (NII): The Zacks Consensus Estimate for average earning assets of $53.6 billion for the quarter indicates 1% sequential fall. Further, a muted loan demand during the quarter might have impacted NII.
Also, a cut in interest rates to near-zero to protect the economy from the impacts of the coronavirus outbreak is likely to have hurt the company’s net interest margin, thereby, affecting NII.
The Zacks Consensus Estimate of $401 million for NII suggests a 1.2% decline on a sequential basis.
Fee Income Growth: Gradual resumption of economic activities in the quarter is likely to have supported fee income. The Zacks Consensus Estimate for bank service charges is $26.53 million, suggesting 30.7% year-over-year growth, while that for income from insurance is pegged at $9.7 million, indicating a 7.8% rise from the year-ago reported figure.
Also, given the strength in equity markets, the assets price increased. This is likely to have led to higher investment management fees for People’s United. The consensus estimate for the same of $79.8 million suggests 2.5% rise sequentially. Likewise, the Zacks Consensus Estimate for cash management fees of $8.13 million for the quarter indicates a slight rise from the prior quarter.
The consensus estimate for non-interest income stands at $97 million, indicating a 7.8% sequential rise.
Higher Expenses: People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have risen.
Earnings Whispers
The chances of People’s United beating the Zacks Consensus Estimate in the third 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 People’s United is -4.57%.
Zacks Rank: People’s United currently has a Zacks Rank #3.
Stocks That Warrant a Look
CullenFrost Bankers, Inc. (CFR - Free Report) is scheduled to release quarterly earnings on Oct 29. The company, which carries a Zacks Rank #3 currently, has an Earnings ESP of +1.57%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BankUnited, Inc. (BKU - Free Report) is set to release quarterly results on Oct 28. The company currently has an Earnings ESP of +6.10% and a Zacks Rank of 3.
The Earnings ESP for Affiliated Managers Group, Inc. (AMG - Free Report) is +0.15% and the company presently carries a Zacks Rank #3. It is scheduled to report quarterly numbers on Oct 26.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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