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Why Is Hilltop (HTH) Down 10% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Hilltop Holdings Inc. (HTH - Free Report) . Shares have lost about 10% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hilltop Holdings Q3 Earnings, Revenues Miss Estimates
Hilltop Holdings reported third-quarter 2017 earnings per share of 31 cents, which missed the Zacks Consensus Estimate of 43 cents. The figure was 41.5% below the year-ago earnings of 53 cents. The reported earnings included hurricane impact of 7 cents per share.
Lower provisions and improvement in loan and deposit balances supported the results. However, a fall in revenues and elevated expenses were the undermining factors.
Net income applicable to common stockholders came in at $30.2 million, down 41.8% year over year.
Revenues Dip, Costs Increase
Operating revenues for the quarter were $403.5 million, down 11.1% year over year. The figure also missed the Zacks Consensus Estimate of $433.5 million.
Net interest income for the quarter grew 5.8% year over year to $105 million. Net interest margin was 3.50%, down 15 basis points (bps) from the prior-year quarter.
Non-interest income dropped 15.8% from the year-ago quarter to $298.5 million. The figure included certain non-recurring items. The decline was due to lower income from all the components.
Non-interest expenses increased 2.9% year over year to $353.8 million. This was largely attributable to higher loss and loss adjustment expenses, and occupancy and equipment expenses, partially offset by lower employees' compensation and benefits expenses, and other expenses.
Credit Quality: A Mixed Bag
Provision for loan losses was $1.3 million, down 68.4% year over year.
However, non-covered non-performing assets as a percentage of total assets were 0.34%, up 10 bps from the prior-year quarter. Also, non-covered non-performing loans were $40.1 million, up 59.1% year over year.
Stable Balance Sheet
As of Sep 30, 2017, Hilltop Holdings’ cash and due from banks was $354.6 million, down 12.6% sequentially. Total shareholders’ equity was $1.9 billion, marginally up year over year.
Net non-covered loans were $6.1 billion as of Sep 30, 2017, relatively stable sequentially. Also, total deposits grew 1.2% from the prior-quarter to $7.7 billion.
Profitability & Capital Ratios Deteriorate
Return on average assets as of Sep 30, 2017 was 0.90%, down from 1.69% in the prior-year quarter. Additionally, return on average equity was 6.32%, down from 11.41% in the year-ago quarter.
Common equity tier 1 capital ratio was 17.66%, down from 16.80% as of Sep 30, 2016. Also, total capital ratio was 18.71%, declining from 18.82% in the prior-year quarter.
Outlook
Management continues to expect loan growth to be nearly 8%–10% in 2017 and nearly 8% in 2018.
The company expects net revenues in Broker-Dealer segment to be approximately $400 million in 2017. Further, pre-tax margin is projected to be in 10-12% range for the segment.
The company expects core margin to be in the range of 3.07–3.13% in 2017, assuming no further rate hikes this year.
Further, the company expects purchase account accretion in 2017 to be approximately $10-$12 million per quarter.
Management expects to continue amortizing the FDIC indemnification asset in 2017.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
VGM Scores
At this time, the stock has a poor Growth Score of F, however its Momentum is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable for momentum and value investors based on our styles scores.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
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Why Is Hilltop (HTH) Down 10% Since the Last Earnings Report?
It has been about a month since the last earnings report for Hilltop Holdings Inc. (HTH - Free Report) . Shares have lost about 10% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Hilltop Holdings Q3 Earnings, Revenues Miss Estimates
Hilltop Holdings reported third-quarter 2017 earnings per share of 31 cents, which missed the Zacks Consensus Estimate of 43 cents. The figure was 41.5% below the year-ago earnings of 53 cents. The reported earnings included hurricane impact of 7 cents per share.
Lower provisions and improvement in loan and deposit balances supported the results. However, a fall in revenues and elevated expenses were the undermining factors.
Net income applicable to common stockholders came in at $30.2 million, down 41.8% year over year.
Revenues Dip, Costs Increase
Operating revenues for the quarter were $403.5 million, down 11.1% year over year. The figure also missed the Zacks Consensus Estimate of $433.5 million.
Net interest income for the quarter grew 5.8% year over year to $105 million. Net interest margin was 3.50%, down 15 basis points (bps) from the prior-year quarter.
Non-interest income dropped 15.8% from the year-ago quarter to $298.5 million. The figure included certain non-recurring items. The decline was due to lower income from all the components.
Non-interest expenses increased 2.9% year over year to $353.8 million. This was largely attributable to higher loss and loss adjustment expenses, and occupancy and equipment expenses, partially offset by lower employees' compensation and benefits expenses, and other expenses.
Credit Quality: A Mixed Bag
Provision for loan losses was $1.3 million, down 68.4% year over year.
However, non-covered non-performing assets as a percentage of total assets were 0.34%, up 10 bps from the prior-year quarter. Also, non-covered non-performing loans were $40.1 million, up 59.1% year over year.
Stable Balance Sheet
As of Sep 30, 2017, Hilltop Holdings’ cash and due from banks was $354.6 million, down 12.6% sequentially. Total shareholders’ equity was $1.9 billion, marginally up year over year.
Net non-covered loans were $6.1 billion as of Sep 30, 2017, relatively stable sequentially. Also, total deposits grew 1.2% from the prior-quarter to $7.7 billion.
Profitability & Capital Ratios Deteriorate
Return on average assets as of Sep 30, 2017 was 0.90%, down from 1.69% in the prior-year quarter. Additionally, return on average equity was 6.32%, down from 11.41% in the year-ago quarter.
Common equity tier 1 capital ratio was 17.66%, down from 16.80% as of Sep 30, 2016. Also, total capital ratio was 18.71%, declining from 18.82% in the prior-year quarter.
Outlook
Management continues to expect loan growth to be nearly 8%–10% in 2017 and nearly 8% in 2018.
The company expects net revenues in Broker-Dealer segment to be approximately $400 million in 2017. Further, pre-tax margin is projected to be in 10-12% range for the segment.
The company expects core margin to be in the range of 3.07–3.13% in 2017, assuming no further rate hikes this year.
Further, the company expects purchase account accretion in 2017 to be approximately $10-$12 million per quarter.
Management expects to continue amortizing the FDIC indemnification asset in 2017.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
VGM Scores
At this time, the stock has a poor Growth Score of F, however its Momentum is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable for momentum and value investors based on our styles scores.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.