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Can Interest Income Support E*TRADE's (ETFC) Q4 Earnings?

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E*TRADE Financial Corporation (ETFC - Free Report) is scheduled to report fourth-quarter 2018 results on Jan 24. The company is expected to witness year-over-year growth in revenues and earnings.

In the last reported quarter, E*TRADE pulled off a positive earnings surprise of 20.5% supported by increased net revenues and benefit from provisions. Further, the quarter witnessed an increase in daily average revenue trades (DARTs) along with growth in customer accounts.

Further, E*TRADE has an impressive earnings surprise history. It delivered positive earnings surprises in each of the trailing four quarters, the average beat being 10.5%.

E*TRADE Financial Corporation Price and EPS Surprise

Estimates for the to-be-reported quarter have remained stable at $1.05 over the last seven days. Notably, the Zacks Consensus Estimate for earnings reflects growth of 64.1% year over year.

Factors That Might Influence Q4 Results

Trading Revenues Might Improve: Substantial market volatility during the fourth quarter is likely to positively impact E*TRADE’s trading revenues. Further, rise in DARTs in the quarter will support commission revenues. The consensus estimate for DARTs is 297,120, up 11.6% sequentially.

Interest Income Might Trend Upward:As net interest income constitutes a significant part of E*TRADE’s revenues, expanding net interest margin on the back of rising interest rates will likely lend support this quarter as well.

Also, some support to interest income will be provided by rise in average interest earning assets. The Zacks Consensus Estimate of $61.5 billion reflects a year-over-year increase of 2.3%.

Notably, the consensus estimate for sales is $747.4 million, indicating improvement of 17.3% from the year-ago quarter.

Expenses Might Trend Up: The company plans to make several investments in 2018 along with spending money on marketing. This might lead to an increase in expenses during the quarter.

Earnings Whispers

According to our quantitative model, E*TRADE doesn’t have the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — 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 E*TRADE is 0.00%.

Zacks Rank: The stock currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.

Huntington Bancshares Incorporated (HBAN - Free Report) is slated to release results on Jan 24. It has an Earnings ESP of +3.97% and a Zacks Rank #3.

Prosperity Bancshares, Inc. (PB - Free Report) is slated to announce results on Jan 30. It has an Earnings ESP of +1.11% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ares Capital Corporation (ARCC - Free Report) is scheduled to release results on Feb 12. It has an Earnings ESP of +1.10% and carries a Zacks Rank #3.

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