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What's in the Cards for LendingClub (LC) in Q2 Earnings?

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LendingClub Corporation (LC - Free Report) is slated to announce second-quarter 2018 results on Aug 7, after the market closes. Its earnings and revenues are projected to grow year over year.

The company’s results in the first quarter benefited from an improvement in total revenues. However, higher expenses hurt results to quite an extent.

Notably, activities of the company in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 2 cents per share has remained unchanged over the past 30 days. Nevertheless, the figure reflects a significant improvement from the prior-year quarter.

Looking at LendingClub’s price performance, its shares have lost 4.8% so far this year compared with 17.4% decline recorded by the industry.

Will the price performance improve post Q2 earnings release? Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to influence Q2 results.

Factors to Impact Q2 Results

LendingClub’s primary source of revenues is transaction fees on loans, which it issues and subsequently lists online for investors to fund. Loan originations in the second quarter were decent. Hence, we expect transaction fees to modestly improve in the to-be-reported quarter. Moreover, the company’s investments in channel diversification and the ability to offer affordable credit to a wide spectrum of borrowers are likely to continue supporting overall revenue growth.

Management projects total net revenues in the second quarter to be $162-$172 million, up from $139.6 million recorded in the prior-year quarter.

Notably, the Zacks Consensus Estimate for sales for the quarter under review is $164.3 million, which reflects growth of 17.7% on a year-over-year basis.

The company incurs significant expenses for selling and marketing of its products. For the to-be-reported quarter, LendingClub projects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to be nearly $12-$22 million.

Management expects net loss of $20-$10 million compared with the year-ago loss of $25.5 million.

Earnings Whispers

According to our quantitative model, it cannot be conclusively predicted whether LendingClub will be able to beat the Zacks Consensus Estimate in the second quarter or not. This is because the stock doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — which is required to increase 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 LendingClub is 0.00%.

Zacks Rank: LendingClub currently has a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other finance stocks, Garrison Capital Inc. (GARS - Free Report) , TCP Capital Corp. (TCPC - Free Report) and FS Investment Corporation (FSIC - Free Report) are scheduled to announce results on Aug 7, Aug 8 and Aug 9, respectively.

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