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What to Expect From Zions (ZION) This Earnings Season?

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Zions Bancorporation (ZION - Free Report) is scheduled to announce third-quarter 2018 results on Oct 22, after the market closes. Its revenues and earnings for the quarter under review are projected to grow year over year.

In the last reported quarter, Zions’ earnings lagged the Zacks Consensus Estimate. Higher adjusted non-interest expenses and expenses were the undermining factors. However, rise in revenues aided results.

Notably, the company’s earnings surprise history seems decent. Its earnings surpassed the Zacks Consensus Estimate in two and matched in one of the trailing four quarters, with an average beat of 9.4%.

Zions Bancorporation Price and EPS Surprise

 

Before we take a look at what our quantitative model predicts for the to-be-reported quarter, let’s check the factors that are likely to impact Q3 results.

Factors to Influence Q3 Results

Modest Growth in Net Interest Income (NII): Higher interest rates will likely boost the bank’s NII in the quarter under review.

Further, while the overall lending scenario was not very impressive during the quarter, commercial and industrial loans (constituting a large part of Zions’ loan portfolio), as well as consumer loans, witnessed decent growth.

Muted Fee Revenue Growth: Zions’ third-quarter non-interest income is expected to benefit slightly from rise in service charge on deposits as deposit balances are expected to increase in the quarter, driven by higher rates. However, as trading activities remained muted during the quarter under review, the company’s capital markets and foreign exchange fees are not expected to benefit much.

Furthermore, as mortgage banking activities continue to be negatively impacted by higher rates, the company’s loan sales and servicing income are anticipated to either remain stable or decline.

Expenses Not to Lend Much Support: Despite undertaking a number of cost control initiatives, Zions’ adjusted non-interest expenses are expected to increase slightly in the quarter to be reported due to its continued spending on technology systems overhaul and investment in franchise.

Here is what our quantitative model predicts:

According to our quantitative model, chances of Zions beating the Zacks Consensus Estimate in the third quarter are low. This is because it doesn’t have the right combination of the two main ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

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 Zions is -0.03%.

Zacks Rank: Zions currently has a Zacks Rank #3.

Nonetheless, Zions’ activities in the third quarter failed to encourage analysts to revise earnings estimates upward. As a result, the Zacks Consensus Estimate for earnings of 96 cents for the Jul-Sep quarter remained unchanged over the past seven days. The figure reflects a year-over-year improvement of 33.3%.

The Zacks Consensus Estimate for revenues for the Sep-end quarter is $699.9 million, which reflects an improvement of 5.9% year over year.

Other Stocks That Warrant a Look

Here are a few other stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Bank of Hawaii Corporation (BOH - Free Report) has an Earnings ESP of +0.71% and carries a Zacks Rank of 3. The company is slated to release results on Oct 22.

SVB Financial Group (SIVB - Free Report) is slated to report third-quarter 2018 results on Oct 25. It has an Earnings ESP of +0.11 % and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cullen/Frost Bankers (CFR - Free Report) is also slated to release results on Oct 25. It has an Earnings ESP of +0.54% and carries a Zacks Rank #3.

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