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Huntington (HBAN) Q4 Earnings: Disappointment in Store?
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Huntington Bancshares Incorporated (HBAN - Free Report) is scheduled to report fourth-quarter 2016 results on Jan 25, before the market opens.
The Columbus, OH-based bank’s third-quarter 2016 earnings outpaced the Zacks Consensus Estimate. Results displayed growth in revenues. Also, the quarter witnessed continual growth in both loan and deposit balances along with a strong capital position. However, elevated expenses and higher provision for credit losses were the headwinds.
Huntington recorded an average positive earnings surprise of 2.38% over the trailing four quarters.
Shares of Huntington gained 49.1% over the past one year, underperforming the Zacks categorized Banks – Midwest industry’s 52.5% growth.
Will consistently increasing expenses dampen Huntington’s fourth-quarter results? Will growth in revenues be able to offset expense pressure? Let’s see how things have shaped up prior to this announcement.
Factors to Influence Q4 Results
Revenues to Grow: Revenues are expected to grow, consistent with the company’s long-term financial goals, despite the low rate environment. However, this anticipated growth excludes the effects of the net Mortgage Servicing Rights (MSR) activity.
Pressure on Net Interest Margin (NIM) Might Ease: Though the persistently low rate environment has taken a toll on the bank’s margins over the past several quarters, the recent Fed interest rate hike might bring about an improvement in NIM.
Credit Quality to Normalize: Overall, credit quality is expected to remain at the current levels. However, in the quarter, moderate volatility can be recorded given the reduction in problem assets and credit costs and volatility in commodities and currency market. Notably, the loan loss provisions are expected to gradually normalize and net charge-offs are likely to remain below the long-term target range of 35–55 basis points.
Expenses to Escalate: We believe higher expenses will act as a dampener for Huntington’s upcoming results. Though management remains focused on expense management, we remain apprehensive, given the company’s continued investments in the business. Notably, though management anticipates annualized cost savings of $255 million related to the acquisition of FirstMerit Corporation, the FDIC surcharge is likely to drive FDIC insurance expenses.
Activities of Huntington during the quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 22 cents per share over the last seven days.
Earnings Whispers
OOur proven model does not conclusively show that Huntington is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Huntington is 0.00%. This is because the Most Accurate estimate of 22 cents is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Huntington’s Zacks Rank #2 increases the predictive power of ESP, we also need to have a positive ESP to be confident of an earnings surprise.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for T. Rowe Price Group, Inc. (TROW - Free Report) is +2.16% and it carries a Zacks Rank #3. The company is scheduled to release fourth-quarter results on Jan 26.
UMB Financial Corporation (UMBF - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #1. It is slated to report fourth-quarter results on Jan 25.
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Huntington (HBAN) Q4 Earnings: Disappointment in Store?
Huntington Bancshares Incorporated (HBAN - Free Report) is scheduled to report fourth-quarter 2016 results on Jan 25, before the market opens.
The Columbus, OH-based bank’s third-quarter 2016 earnings outpaced the Zacks Consensus Estimate. Results displayed growth in revenues. Also, the quarter witnessed continual growth in both loan and deposit balances along with a strong capital position. However, elevated expenses and higher provision for credit losses were the headwinds.
Huntington recorded an average positive earnings surprise of 2.38% over the trailing four quarters.
Huntington Bancshares Inc. Price and EPS Surprise
Huntington Bancshares Inc. Price and EPS Surprise | Huntington Bancshares Inc. Quote
Shares of Huntington gained 49.1% over the past one year, underperforming the Zacks categorized Banks – Midwest industry’s 52.5% growth.
Will consistently increasing expenses dampen Huntington’s fourth-quarter results? Will growth in revenues be able to offset expense pressure? Let’s see how things have shaped up prior to this announcement.
Factors to Influence Q4 Results
Revenues to Grow: Revenues are expected to grow, consistent with the company’s long-term financial goals, despite the low rate environment. However, this anticipated growth excludes the effects of the net Mortgage Servicing Rights (MSR) activity.
Pressure on Net Interest Margin (NIM) Might Ease: Though the persistently low rate environment has taken a toll on the bank’s margins over the past several quarters, the recent Fed interest rate hike might bring about an improvement in NIM.
Credit Quality to Normalize: Overall, credit quality is expected to remain at the current levels. However, in the quarter, moderate volatility can be recorded given the reduction in problem assets and credit costs and volatility in commodities and currency market. Notably, the loan loss provisions are expected to gradually normalize and net charge-offs are likely to remain below the long-term target range of 35–55 basis points.
Expenses to Escalate: We believe higher expenses will act as a dampener for Huntington’s upcoming results. Though management remains focused on expense management, we remain apprehensive, given the company’s continued investments in the business. Notably, though management anticipates annualized cost savings of $255 million related to the acquisition of FirstMerit Corporation, the FDIC surcharge is likely to drive FDIC insurance expenses.
Activities of Huntington during the quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 22 cents per share over the last seven days.
Earnings Whispers
OOur proven model does not conclusively show that Huntington is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Huntington is 0.00%. This is because the Most Accurate estimate of 22 cents is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Huntington’s Zacks Rank #2 increases the predictive power of ESP, we also need to have a positive ESP to be confident of an earnings surprise.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.
Raymond James Financial, Inc. (RJF - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #2. It is scheduled to report fourth-quarter results on Jan 25. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T. Rowe Price Group, Inc. (TROW - Free Report) is +2.16% and it carries a Zacks Rank #3. The company is scheduled to release fourth-quarter results on Jan 26.
UMB Financial Corporation (UMBF - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #1. It is slated to report fourth-quarter results on Jan 25.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>