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What's in Store for Santander Consumer (SC) in Q2 Earnings?

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Santander Consumer USA Holdings Inc. is scheduled to report second-quarter 2018 results on Jul 25, before the market opens. While its earnings for the quarter are projected to improve year over year, revenues are expected to decline marginally.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Higher net finance and other interest income as well as decline in expenses and credit cost supported the results.

Nonetheless, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 26.9%.

Notably, the Zacks Consensus Estimate for earnings of 74 cents for the to-be reported quarter has remained stable over the last 30 days. The earnings figure reflects year-over-year growth of 5.7%.

Factors to Impact Q2 Results

Management expects net finance and other interest income to be up 1-3% sequentially, driven by higher loan on lease balances. Total other income is projected to be relatively stable or down $20 million, given the seasonality.

In fact, the Zacks Consensus Estimate for sales is $1.66 billion for the quarter, which reflects a slight decline on a year-over-year basis.

Management expects operating expenses to be flat in the to-be-reported quarter, mainly attributable to seasonally lower reposition expenses and disciplined expense management.

Driven by improving credit performance, provision expenses are expected to be down $20-$60 million from the prior quarter.

Now, let’s take a look at what our quantitative model predicts:

Our quantitative model shows that chances of Santander Consumer beating the earnings estimates this time are low. That’s because it does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

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

Earnings ESP: The Earnings ESP for Santander Consumer is -0.54%.

Zacks Rank: Santander Consumer currently has a Zacks Rank #3. But we need to have a positive ESP to be sure of earnings beat.

Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

BankUnited, Inc. (BKU - Free Report) has an Earnings ESP of +0.29% and carries a Zacks Rank of 3. The company is slated to release results on Jul 24.

SVB Financial Group is slated to report second-quarter 2018 results on Jul 26. It has an Earnings ESP of +1.26% and a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilltop Holdings Inc. (HTH - Free Report) is also slated to release results on Jul 26. It has an Earnings ESP of +0.40% and carries a Zacks Rank #3.

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