We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Hancock Whitney (HWC) Up 1.1% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hancock Whitney due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hancock Whitney’s Q4 Earnings Miss on Higher Costs
Hancock Whitney’s fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Higher expenses and decline in net interest margin hurt the company’s results. However, improvement in net revenues and decline in provision for loan losses acted as tailwinds. Further, loan and deposit growth remained strong.
After considering the impact of several non-recurring items, net income for the fourth quarter came in at $96.2 million or $1.10 per share, up from $55.4 million or 64 cents per share reported in the prior-year quarter.
Adjusted earnings per share for 2018 increased to $3.99, up 38% from the prior year. The earnings figure also surpassed Zacks Consensus Estimate of $3.98. Net income for the year was $323.7 million or $3.72 per share compared with $215.6 million or $2.48 per share recorded in 2017.
Revenues Improve, Expenses Flare Up
Hancock’s net revenues for the quarter were $292 million, up 5.1% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $294.8 million.
Hancock’s net revenues for 2018 came in at $1.13 billion, climbing 5.1% year over year. The figure, however, marginally missed the Zacks Consensus Estimate of $1.14 billion.
Net interest income on tax equivalent basis grew 2.1% year over year to $221.5 million. Net interest margin, on a tax-equivalent basis, came in at 3.39%, declining 9 basis points.
Non-interest income totaled $74.5 million, reflecting an increase of 7% from the year-ago quarter. The figure included $0.6 million in net gains, which was related to portfolio restructuring.
Total operating expenses flared up 5.3% year over year to $177 million. This upswing stemmed from rise in personnel expense as well as other operating expense.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.56% of average total loans, inching up from 0.44% in the year-ago quarter. Nevertheless, provision for loan losses plunged 46% year over year to roughly $8.1 million.
Also, total non-performing assets decreased 12% year over year to $352.6 million.
Strong Balance Sheet, Higher Profitability and Capital Ratios
As of Dec 31, 2018, total loans were $20 billion, up 2.5% from the prior-quarter end. Furthermore, total deposits increased 3% from the previous quarter to $23.2 billion.
Return on average assets was 1.35% at the end of the Oct-Dec quarter, up from 0.82% recorded in the prior-year quarter. In addition, return on average common equity was 12.76% compared with 7.67% at the end of December 2017.
As of Dec 31, 2018, Tier 1 leverage ratio was 8.67%, up from 8.43% recorded in the year-ago quarter. Tier 1 risk-based capital ratio was 10.51%, increasing from 10.21% as of Dec 31, 2017.
First-Quarter 2019 Outlook
Loan growth is expected to be in the range of $200-$225 million.
NIM is projected to increase 4-6 bps, mainly driven by funding mix, markets rates and impact of portfolio restructuring.
Operating non-interest income is anticipated to be flat to slightly down, due to seasonality.
Operating expenses will be reflecting seasonally high payroll costs.
Provisions for loan losses are expected to be in the range of $8-$9 million.
Effective tax rate is expected to be nearly 17-19%.
2019 Outlook
Management expects portfolio restructuring efforts to improve earnings by 5 cents per share and NIM nearly 5 bps (most likely to be earned in the first quarter). Additionally, yield on investment portfolio will likely increase roughly 10 bps.
Operating non-interest income is expected to rise 5-7% year over year.
Operating expenses are expected to increase 4-5%.
Effective tax rate is expected to be nearly 17-19%.
Long-term outlook – Corporate Strategic Objectives (on a quarterly basis)
These objectives are to be achieved by fourth-quarter 2020. Earnings per share (excluding non-recurring items) are expected to be in the range of $1.20-$1.25. Efficiency ratio is projected to be lower than 56%.
ROA (operating) will likely be between 1.40% and 1.45%. Tangible common equity (TCE) ratio is anticipated to be more than 8% and return on tangible common equity (ROTCE) ratio (operating) is expected to be more than 15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Hancock Whitney has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hancock Whitney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Hancock Whitney (HWC) Up 1.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Hancock Whitney (HWC - Free Report) . Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hancock Whitney due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hancock Whitney’s Q4 Earnings Miss on Higher Costs
Hancock Whitney’s fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. The reported figure, however, came in 30.2% higher than the year-ago tally.
Higher expenses and decline in net interest margin hurt the company’s results. However, improvement in net revenues and decline in provision for loan losses acted as tailwinds. Further, loan and deposit growth remained strong.
After considering the impact of several non-recurring items, net income for the fourth quarter came in at $96.2 million or $1.10 per share, up from $55.4 million or 64 cents per share reported in the prior-year quarter.
Adjusted earnings per share for 2018 increased to $3.99, up 38% from the prior year. The earnings figure also surpassed Zacks Consensus Estimate of $3.98. Net income for the year was $323.7 million or $3.72 per share compared with $215.6 million or $2.48 per share recorded in 2017.
Revenues Improve, Expenses Flare Up
Hancock’s net revenues for the quarter were $292 million, up 5.1% year over year. However, the revenue figure missed the Zacks Consensus Estimate of $294.8 million.
Hancock’s net revenues for 2018 came in at $1.13 billion, climbing 5.1% year over year. The figure, however, marginally missed the Zacks Consensus Estimate of $1.14 billion.
Net interest income on tax equivalent basis grew 2.1% year over year to $221.5 million. Net interest margin, on a tax-equivalent basis, came in at 3.39%, declining 9 basis points.
Non-interest income totaled $74.5 million, reflecting an increase of 7% from the year-ago quarter. The figure included $0.6 million in net gains, which was related to portfolio restructuring.
Total operating expenses flared up 5.3% year over year to $177 million. This upswing stemmed from rise in personnel expense as well as other operating expense.
Credit Quality: Mixed Bag
Net charge-offs from the non-covered loan portfolio was 0.56% of average total loans, inching up from 0.44% in the year-ago quarter. Nevertheless, provision for loan losses plunged 46% year over year to roughly $8.1 million.
Also, total non-performing assets decreased 12% year over year to $352.6 million.
Strong Balance Sheet, Higher Profitability and Capital Ratios
As of Dec 31, 2018, total loans were $20 billion, up 2.5% from the prior-quarter end. Furthermore, total deposits increased 3% from the previous quarter to $23.2 billion.
Return on average assets was 1.35% at the end of the Oct-Dec quarter, up from 0.82% recorded in the prior-year quarter. In addition, return on average common equity was 12.76% compared with 7.67% at the end of December 2017.
As of Dec 31, 2018, Tier 1 leverage ratio was 8.67%, up from 8.43% recorded in the year-ago quarter. Tier 1 risk-based capital ratio was 10.51%, increasing from 10.21% as of Dec 31, 2017.
First-Quarter 2019 Outlook
Loan growth is expected to be in the range of $200-$225 million.
NIM is projected to increase 4-6 bps, mainly driven by funding mix, markets rates and impact of portfolio restructuring.
Operating non-interest income is anticipated to be flat to slightly down, due to seasonality.
Operating expenses will be reflecting seasonally high payroll costs.
Provisions for loan losses are expected to be in the range of $8-$9 million.
Effective tax rate is expected to be nearly 17-19%.
2019 Outlook
Management expects portfolio restructuring efforts to improve earnings by 5 cents per share and NIM nearly 5 bps (most likely to be earned in the first quarter). Additionally, yield on investment portfolio will likely increase roughly 10 bps.
Operating non-interest income is expected to rise 5-7% year over year.
Operating expenses are expected to increase 4-5%.
Effective tax rate is expected to be nearly 17-19%.
Long-term outlook – Corporate Strategic Objectives (on a quarterly basis)
These objectives are to be achieved by fourth-quarter 2020. Earnings per share (excluding non-recurring items) are expected to be in the range of $1.20-$1.25. Efficiency ratio is projected to be lower than 56%.
ROA (operating) will likely be between 1.40% and 1.45%. Tangible common equity (TCE) ratio is anticipated to be more than 8% and return on tangible common equity (ROTCE) ratio (operating) is expected to be more than 15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Hancock Whitney has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hancock Whitney has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.