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Can Loan Growth Benefit People's United (PBCT) Q3 Earnings?
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People's United Financial, Inc. is scheduled to report third-quarter 2018 results on Oct 18. Both revenues and earnings are anticipated to reflect year-over-year improvement.
Before we discuss the factors that could influence the results, let’s take a look at how the company performed in the last reported quarter.
Driven by improved net interest income and lower expenses, People's United reported 33.3% year-over-year rise in second-quarter 2018. Further, elevated loans and lower provisions were tailwinds.
Notably, People's United delivered positive earnings surprises in two out of the four trailing quarters, with an average beat of 3.78%.
People's United Financial, Inc. Price and EPS Surprise
Regarding the stock’s performance, shares of the company declined 5.4% for the three-month period ended Sep 30, 2018. Will the upcoming earnings release give a boost to People's United stock? This depends largely on whether or not the firm is able to post a beat in the third quarter. Notably, our quantitative model shows that People's United is likely to beat on earnings this season. Here’s why:
Our proven model shows that the company has the combination of the two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).
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 the stock is currently pegged at +0.30%. This is a very significant and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: The combination of People's United’s Zacks Rank #2 and a positive ESP makes us confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement.
Factors to Influence Q3 Results
Loan Growth: A modest increase in lending — mainly in the areas of commercial and industrial, and consumer — is expected to have led to improvement in net interest income (NII). A rise in interest rates will provide some support despite flattening of the yield curve in the Sep-end quarter.
In addition, management’s expectations of loan and deposit growth in 2018 will likely be reflected in this quarter. Management projects loan portfolio to grow in the range of 3-5%, while deposits are projected to be up 2-4%.
Modest Rise in Net Interest Income (NII): Given the influence of rise in interest rates, People's United is anticipated to have recorded an increase in NII. Notably, management’s projections of 2018 NII’s growth in the range of 10-12% is likely to show impact in the quarter to be reported as well. This is based on the expectation of net interest margin (NIM) of 3.05-3.15%, on assumption of two 25-basis-point rate hikes during the year.
Fee Income to Escalate: On strong retail banking, fee income might escalate for the bank. Additionally, the company projects non-interest income to be up 3-5% in 2018, the impact of which is likely to be reflected in the Jul-Sep quarter.
Increase in Expenses: Despite undertaking a number of expense-saving initiatives, People’s United’s operating expenses have witnessed an elevated level. Though the company is focused on optimizing its branch network and has initiated installation of technology to improve efficiencies and reduce costs, escalating expense levels are likely to curb bottom-line expansion.
Stocks That Warrant a Look
Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for M&T Bank (MTB - Free Report) is +0.35% and the stock carries a Zacks Rank of 3. The company is scheduled to report earnings on Oct 17.
Fifth Third Bancorp (FITB - Free Report) has an Earnings ESP of +0.01% and carries a Zacks Rank of 3. It is scheduled to report results on Oct 23.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Can Loan Growth Benefit People's United (PBCT) Q3 Earnings?
People's United Financial, Inc. is scheduled to report third-quarter 2018 results on Oct 18. Both revenues and earnings are anticipated to reflect year-over-year improvement.
Before we discuss the factors that could influence the results, let’s take a look at how the company performed in the last reported quarter.
Driven by improved net interest income and lower expenses, People's United reported 33.3% year-over-year rise in second-quarter 2018. Further, elevated loans and lower provisions were tailwinds.
Notably, People's United delivered positive earnings surprises in two out of the four trailing quarters, with an average beat of 3.78%.
People's United Financial, Inc. Price and EPS Surprise
People's United Financial, Inc. Price and EPS Surprise | People's United Financial, Inc. Quote
Regarding the stock’s performance, shares of the company declined 5.4% for the three-month period ended Sep 30, 2018. Will the upcoming earnings release give a boost to People's United stock? This depends largely on whether or not the firm is able to post a beat in the third quarter. Notably, our quantitative model shows that People's United is likely to beat on earnings this season. Here’s why:
Our proven model shows that the company has the combination of the two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).
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 the stock is currently pegged at +0.30%. This is a very significant and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: The combination of People's United’s Zacks Rank #2 and a positive ESP makes us confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement.
Factors to Influence Q3 Results
Loan Growth: A modest increase in lending — mainly in the areas of commercial and industrial, and consumer — is expected to have led to improvement in net interest income (NII). A rise in interest rates will provide some support despite flattening of the yield curve in the Sep-end quarter.
In addition, management’s expectations of loan and deposit growth in 2018 will likely be reflected in this quarter. Management projects loan portfolio to grow in the range of 3-5%, while deposits are projected to be up 2-4%.
Modest Rise in Net Interest Income (NII): Given the influence of rise in interest rates, People's United is anticipated to have recorded an increase in NII. Notably, management’s projections of 2018 NII’s growth in the range of 10-12% is likely to show impact in the quarter to be reported as well. This is based on the expectation of net interest margin (NIM) of 3.05-3.15%, on assumption of two 25-basis-point rate hikes during the year.
Fee Income to Escalate: On strong retail banking, fee income might escalate for the bank. Additionally, the company projects non-interest income to be up 3-5% in 2018, the impact of which is likely to be reflected in the Jul-Sep quarter.
Increase in Expenses: Despite undertaking a number of expense-saving initiatives, People’s United’s operating expenses have witnessed an elevated level. Though the company is focused on optimizing its branch network and has initiated installation of technology to improve efficiencies and reduce costs, escalating expense levels are likely to curb bottom-line expansion.
Stocks That Warrant a Look
Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
Cullen/Frost Bankers, Inc. (CFR - Free Report) is set to release results on Oct 25. The company has an Earnings ESP of +0.54% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for M&T Bank (MTB - Free Report) is +0.35% and the stock carries a Zacks Rank of 3. The company is scheduled to report earnings on Oct 17.
Fifth Third Bancorp (FITB - Free Report) has an Earnings ESP of +0.01% and carries a Zacks Rank of 3. It is scheduled to report results on Oct 23.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>