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Can Citizens (CFG) Maintain its Earnings Beat Streak in Q1?

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Citizens Financial Group (CFG - Free Report) is scheduled to report first-quarter 2018 results on Apr 20, before the market opens. The company is expected to witness year-over-year growth in revenues and earnings.

Further, Citizens Financial boasts an impressive surprise history. It surpassed earnings estimates in each of the trailing four quarters, with an average beat of 9.7%.

Citizens Financial Group, Inc. Price and EPS Surprise

The Providence, RI-based bank’s organic growth was reflected in fourth-quarter 2017 results, which witnessed continued rise in revenues and lower provisions. Also, the company recorded rise in deposits and improved credit quality.

Citizens Financial’s first-quarter results are expected to benefit from rising interest income and balance sheet optimization initiatives. Also, the company’s expense control efforts might lend some support. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings of 76 cents indicates a 24.6% year-over-year improvement.

Further, the Zacks Consensus Estimate for revenues of $1.47 billion for the to-be-reported quarter reflects an improvement of 5.9% from the prior-year quarter.

However, the company’s price performance has not been very impressive. Its shares have lost 13.8% in the past three months compared with the industry’s decline of 6.9%.

Will the price performance improve post first-quarter earnings release? Let’s check which factors are expected to impact Citizens Financial’s Q1 earnings.

Factors That Might Drive Q1 Results

Higher Net Interest Income (NII): The first quarter was decent in terms of lending activities and higher interest rates, hence Citizens Financial’s NII is likely to increase. The Zacks Consensus Estimate for NII of $1.01 billion reflects 7.5% growth year over year.

Moreover, estimates for average interest-earning assets of $139 billion reflect a 1.9% increase from the year-ago quarter.

Controlled Expenses: Citizens Financial’s expenses are expected to continue declining due to its TOP IV efficiency initiative. Also, its self-funding revenue initiatives might help in lowering the efficiency ratio.

Fee Income Might Remain Stable: The quarter witnessed rise in advisory and underwriting fees on the back of higher M&A activities and equity issuances. Nevertheless, debt originations remained low during the quarter and the related fees are expected to remain muted. The consensus estimate for Capital Market Fees of $40 million indicates a 16.7% decline.

However, the trend of consumer spending was strong during the quarter, which is likely to provide some support to its top line. The consensus estimate for Trust & Investment Management Fees of $42 million indicates a 7.7% increase.

Mortgage Banking Likely to Decline: With the rising interest rate environment, no major help is expected from the mortgage banking segment. As refinancing activities slowed down during the quarter, mortgage banking revenues are not expected to witness much improvement.

Earnings Whispers

According to our quantitative model, we cannot conclusively predict an earnings beat for Citizens Financial in the upcoming results. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen, which is not the case here as elaborated below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP for Citizens Financial is 0.00%.

Zacks Rank: The stock carries a Zacks Rank of 3.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as they have the right combination of elements to post an earnings beat in their upcoming releases.

BOK Financial Corporation (BOKF - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank of 2 (Buy). It is slated to report first-quarter 2018 results on Apr 25. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New York Community Bancorp (NYCB - Free Report) is slated to release results on Apr 25. It has an Earnings ESP of +0.14% and carries a Zacks Rank #3.

Banner Corporation (BANR - Free Report) has an Earnings ESP of +8.14% and carries a Zacks Rank of 3. The company is slated to release results on Apr 23.

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