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BankUnited (BKU) Down 2.7% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for BankUnited, Inc. (BKU - Free Report) . Shares have lost about 2.7% in that frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is BKU due for a breakout? Before we dive into how investors and analysts have reacted 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.
BankUnited Beats on Q4 Earnings as Revenues Improve
BankUnited released its fourth-quarter and full-year 2017 results. Adjusted earnings per share of 86 cents for the quarter surpassed the Zacks Consensus Estimate of 62 cents. Moreover, the bottom line compared favorably with the prior-year quarter’s earnings of 59 cents per share.
Results were primarily driven by an increase in both net interest income and non-interest income. Also, lower provisions supported results to quite an extent. Moreover, the company witnessed strong growth in loans and deposits. However, higher expenses remained an undermining factor.
After taking into consideration the impact of a discrete income tax benefit and related professional fees, net income for the quarter came in at $417.8 million or $3.79 per share.
Adjusted earnings per share of $2.65 for 2017 also surpassed the Zacks Consensus Estimate of $2.39. Moreover, the figure represents improvement of 26.8% from the previous year. After taking into consideration the impact of the discrete income tax benefit and related professional fees, net income for the full-year came in at $614.3 million or $5.58 per share.
Revenues Improve, Costs Escalate
Net revenues for the quarter came in at $285.4 million, surpassing the Zacks Consensus Estimate of $270.3 million. Further, the reported figure increased 11.1% year over year.
For 2017, net revenues came in at $1.11 billion, surpassing the Zacks Consensus Estimate of $1.08 billion. Also, the reported figure improved 13.4% from the prior year.
Net interest income for the quarter was $238.8 million, increasing nearly 5% year over year, led by higher interest income, partially offset by an increase in interest expenses.
Net interest margin decreased 15 basis points year over year to 3.52%.
Non-interest income was $46.5 million, increasing 58.9% from the year-ago quarter. The rise was primarily driven by a significant increase in net gain on sale of loans.
Non-interest expenses increased 3.2% from the year-ago quarter to $161.3 million, primarily due to a rise in employee compensation and benefits costs, deposit insurance expense and professional fees.
Credit Quality: Mixed Bag
As of Dec 31, 2017, the ratio of net charge-offs to average loans was 0.38%, increasing from 0.13% as of Dec 31, 2016. Also, nonperforming loans to total loans was 0.81%, increasing from 0.70% as of Dec 31, 2016.
However, provision for loan losses for the quarter was $5.2 million, down from $8.5 million in the prior-year quarter.
Solid Balance Sheet & Capital Ratios
As of Dec 31, 2017, net loans totaled $21.3 billion compared with $19.2 billion as of Dec 31, 2016. Further, total deposits amounted to $21.9 billion, increasing from $19.5 billion as of Dec 31, 2016.
As of Dec 31, 2017, Tier 1 leverage ratio was 9.7%, while Tier 1 risk-based capital ratio came in at 13.1%. Further, total risk-based capital ratio was 13.8% as of the same date.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 5.54%, increasing from 0.92% reported in the prior-quarter end. Also, return on average stockholders’ equity was 59.33%, up from 10.45% at the end of the prior-year quarter.
Outlook
For 2018, management expects both loan and deposit growth in the range of 10-15%. Loans are likely to be driven by growth in the Florida region.
Further, expenses are projected to rise in high single-digit range in 2018.
The company expects NIM to be nearly 3.50% in 2018. After taking into consideration lower tax rates, NIM on tax equivalent basis will likely be around 3.59%.
Also, the company projects an effective tax rate in the range of 23-24% in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
At this time, BKU has an average Growth Score of C, however its Momentum is doing a lot better with an A. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, BKU has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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BankUnited (BKU) Down 2.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for BankUnited, Inc. (BKU - Free Report) . Shares have lost about 2.7% in that frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is BKU due for a breakout? Before we dive into how investors and analysts have reacted 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.
BankUnited Beats on Q4 Earnings as Revenues Improve
BankUnited released its fourth-quarter and full-year 2017 results. Adjusted earnings per share of 86 cents for the quarter surpassed the Zacks Consensus Estimate of 62 cents. Moreover, the bottom line compared favorably with the prior-year quarter’s earnings of 59 cents per share.
Results were primarily driven by an increase in both net interest income and non-interest income. Also, lower provisions supported results to quite an extent. Moreover, the company witnessed strong growth in loans and deposits. However, higher expenses remained an undermining factor.
After taking into consideration the impact of a discrete income tax benefit and related professional fees, net income for the quarter came in at $417.8 million or $3.79 per share.
Adjusted earnings per share of $2.65 for 2017 also surpassed the Zacks Consensus Estimate of $2.39. Moreover, the figure represents improvement of 26.8% from the previous year. After taking into consideration the impact of the discrete income tax benefit and related professional fees, net income for the full-year came in at $614.3 million or $5.58 per share.
Revenues Improve, Costs Escalate
Net revenues for the quarter came in at $285.4 million, surpassing the Zacks Consensus Estimate of $270.3 million. Further, the reported figure increased 11.1% year over year.
For 2017, net revenues came in at $1.11 billion, surpassing the Zacks Consensus Estimate of $1.08 billion. Also, the reported figure improved 13.4% from the prior year.
Net interest income for the quarter was $238.8 million, increasing nearly 5% year over year, led by higher interest income, partially offset by an increase in interest expenses.
Net interest margin decreased 15 basis points year over year to 3.52%.
Non-interest income was $46.5 million, increasing 58.9% from the year-ago quarter. The rise was primarily driven by a significant increase in net gain on sale of loans.
Non-interest expenses increased 3.2% from the year-ago quarter to $161.3 million, primarily due to a rise in employee compensation and benefits costs, deposit insurance expense and professional fees.
Credit Quality: Mixed Bag
As of Dec 31, 2017, the ratio of net charge-offs to average loans was 0.38%, increasing from 0.13% as of Dec 31, 2016. Also, nonperforming loans to total loans was 0.81%, increasing from 0.70% as of Dec 31, 2016.
However, provision for loan losses for the quarter was $5.2 million, down from $8.5 million in the prior-year quarter.
Solid Balance Sheet & Capital Ratios
As of Dec 31, 2017, net loans totaled $21.3 billion compared with $19.2 billion as of Dec 31, 2016. Further, total deposits amounted to $21.9 billion, increasing from $19.5 billion as of Dec 31, 2016.
As of Dec 31, 2017, Tier 1 leverage ratio was 9.7%, while Tier 1 risk-based capital ratio came in at 13.1%. Further, total risk-based capital ratio was 13.8% as of the same date.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 5.54%, increasing from 0.92% reported in the prior-quarter end. Also, return on average stockholders’ equity was 59.33%, up from 10.45% at the end of the prior-year quarter.
Outlook
For 2018, management expects both loan and deposit growth in the range of 10-15%. Loans are likely to be driven by growth in the Florida region.
Further, expenses are projected to rise in high single-digit range in 2018.
The company expects NIM to be nearly 3.50% in 2018. After taking into consideration lower tax rates, NIM on tax equivalent basis will likely be around 3.59%.
Also, the company projects an effective tax rate in the range of 23-24% in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
BankUnited, Inc. Price and Consensus
BankUnited, Inc. Price and Consensus | BankUnited, Inc. Quote
VGM Scores
At this time, BKU has an average Growth Score of C, however its Momentum is doing a lot better with an A. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, BKU has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.