The Q3 earnings cycle for the Finance sector has reached its final phase. Results reported by most of the industry participants so far depict a notable improvement in the sector’s performance, despite a challenging operating backdrop.
Per our latest Earnings Preview report, nearly 99% of the S&P 500 companies in the Finance sector have reported results for third-quarter 2016 as of Nov 4. Total earnings for these companies increased 12.7% year over year on a revenue improvement of 6.7%. Notably, 73% companies have surpassed the bottom-line expectations and 75.3% beat on the top line.
In fact, overall earnings for the S&P 500 stocks in the Finance sector are projected to be up 11.8% year over year in the third quarter. This compares favorably with a 5.2% decline in the prior quarter.
Improving domestic economic factors and recovery in oil prices chiefly contributed to the sector’s recovery. Additionally, an improving labor market and a recovering housing market aided growth.
On the other hand, global concerns and a persistent low interest rate environment were the undermining factors.
Let’s take a look at the two finance stocks that are scheduled to report their third-quarter 2016 earnings on Nov 8.
Northstar Asset Management Group Inc. : The Zacks Consensus Estimate for the stock has remained stable ahead of its earnings release. The estimate of 26 cents per share reflects no growth on a year-over-year basis.
Further, based on our proven model, Northstar is less likely to beat the Zacks Consensus Estimate in the forthcoming release, as it carries a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Our quantitative model highlights those stocks that have the combination of a positive Earnings ESP and a favorable Zacks Rank – Zacks Rank #1, #2 (Buy) or #3 – for an earnings surprise call.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Also, the company does not have a decent earnings surprise history. The stock lagged the Zacks Consensus Estimate in three of the trailing four quarters, recording an average negative earnings surprise of 1.8%.
Prospect Capital Corporation (PSEC - Free Report) : The Zacks Consensus Estimate for this stock has remained constant ahead of its earnings release. The estimate of 24 cents per share highlights a year-over-year decline of 7.7%.
Moreover, the stock is less likely to beat the Zacks Consensus Estimate in the to-be-reported quarter, as it carries a Zacks Rank #3 and an Earnings ESP of 0.00%.
Nevertheless, the company boasts a decent earnings surprise history. The stock has outperformed the Zacks Consensus Estimate in three of the trailing four quarters, recording an average positive earnings surprise of 4%.
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