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Low Interest Income to Mar People's United (PBCT) Q1 Earnings
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People's United Financial, Inc. is scheduled to report first-quarter 2020 results on Apr 23. While its revenues are expected to have improved year over year, earnings might have declined.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
People's United posted an earnings beat in fourth-quarter 2019. Improvement in loan balances along with higher fee income was partially offset by elevated expenses.
The company surpassed estimates on two occasions and posted in-line results in two of the trailing four quarters, the average beat being 2.23%.
People's United Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 23 cents, which suggests a fall of 30.3% from the year-ago reported number. However, the consensus estimate for sales of $498.2 million indicates 16.6% growth.
Factors at Play
Loan Growth: Per the Fed’s latest data, the company’s loan balance is likely to have improved on a sequential basis for the March-end quarter, supported by rise in commercial and industrial (C&I), real estate, and consumer loans.
Management expects loan portfolio growth of 2-4% for 2020, the impact of which is likely to be reflected in the upcoming results as well. The goal excludes the transactional portion of the New York multifamily portfolio, which is in runoff mode.
Muted Net Interest Income (NII): A decent lending scenario during the quarter is likely to have supported NII. Also, the Zacks Consensus Estimate for average earning assets of $51.5 billion for the quarter indicates 3.8% sequential growth.
However, a decline in interest rates in October 2019 and again in March to near-zero level as a move to protect the economy from the impacts of the coronavirus outbreak are likely to have hurt the company’s net interest margin, thereby, affecting NII.
The Zacks Consensus Estimate of $390 million for NII suggests a 1.8% rise on a sequential basis.
Dismal Fee Income: Due to the pandemic, a slowdown in economic activities in the quarter is likely to have strained fee income. Outflows from the asset-management business might have been recorded on market losses. Significant declines in the prices of asset values are expected to have impacted related fees. The consensus estimate of $11.7 million for commercial lending fees projects a decline of 9.3% sequentially.
Further, the Zacks Consensus Estimate for bank service charges is at $28.7 million, down nearly 1%, while that of income from insurance is pegged at $10.8 million, indicating a 44% surge.
Overall, the consensus estimate for non-interest income is pinned at $110 million, indicating an 11.3% sequential fall.
Additionally, the company projects rise in non-interest income of 2-4% for 2020, the impact of which is likely to be reflected in first-quarter results.
Higher Expenses:People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have risen.
Earnings Whispers
The chances of People’s United beating the Zacks Consensus Estimate in the first quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing 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 People’s United is -11.85%.
Zacks Rank: People’s United currently has a Zacks Rank #4 (Sell).
The Earnings ESP for CURO Group Holdings Corp. is +1.47% and it sports a Zacks Rank of 1 currently. The company is expected to report quarterly numbers soon.
SB One Bancorp is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.85%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Low Interest Income to Mar People's United (PBCT) Q1 Earnings
People's United Financial, Inc. is scheduled to report first-quarter 2020 results on Apr 23. While its revenues are expected to have improved year over year, earnings might have declined.
Before we discuss the factors that might have influenced the results, let’s take a look at how the company performed in the last reported quarter.
People's United posted an earnings beat in fourth-quarter 2019. Improvement in loan balances along with higher fee income was partially offset by elevated expenses.
The company surpassed estimates on two occasions and posted in-line results in two of the trailing four quarters, the average beat being 2.23%.
People's United Financial, Inc. Price and EPS Surprise
People's United Financial, Inc. price-eps-surprise | People's United Financial, Inc. Quote
The Zacks Consensus Estimate for its earnings for the to-be-reported quarter is pegged at 23 cents, which suggests a fall of 30.3% from the year-ago reported number. However, the consensus estimate for sales of $498.2 million indicates 16.6% growth.
Factors at Play
Loan Growth: Per the Fed’s latest data, the company’s loan balance is likely to have improved on a sequential basis for the March-end quarter, supported by rise in commercial and industrial (C&I), real estate, and consumer loans.
Management expects loan portfolio growth of 2-4% for 2020, the impact of which is likely to be reflected in the upcoming results as well. The goal excludes the transactional portion of the New York multifamily portfolio, which is in runoff mode.
Muted Net Interest Income (NII): A decent lending scenario during the quarter is likely to have supported NII. Also, the Zacks Consensus Estimate for average earning assets of $51.5 billion for the quarter indicates 3.8% sequential growth.
However, a decline in interest rates in October 2019 and again in March to near-zero level as a move to protect the economy from the impacts of the coronavirus outbreak are likely to have hurt the company’s net interest margin, thereby, affecting NII.
The Zacks Consensus Estimate of $390 million for NII suggests a 1.8% rise on a sequential basis.
Dismal Fee Income: Due to the pandemic, a slowdown in economic activities in the quarter is likely to have strained fee income. Outflows from the asset-management business might have been recorded on market losses. Significant declines in the prices of asset values are expected to have impacted related fees. The consensus estimate of $11.7 million for commercial lending fees projects a decline of 9.3% sequentially.
Further, the Zacks Consensus Estimate for bank service charges is at $28.7 million, down nearly 1%, while that of income from insurance is pegged at $10.8 million, indicating a 44% surge.
Overall, the consensus estimate for non-interest income is pinned at $110 million, indicating an 11.3% sequential fall.
Additionally, the company projects rise in non-interest income of 2-4% for 2020, the impact of which is likely to be reflected in first-quarter results.
Higher Expenses:People’s United’s inorganic growth strategies are likely to have resulted in higher merger-related costs. Also, with the expansion of operations, compensation and benefits might have risen.
Earnings Whispers
The chances of People’s United beating the Zacks Consensus Estimate in the first quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing 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 People’s United is -11.85%.
Zacks Rank: People’s United currently has a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
BCB Bancorp, Inc. (NJ) (BCBP - Free Report) is expected to release quarterly results soon. The company currently has an Earnings ESP of +4.17% and 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 CURO Group Holdings Corp. is +1.47% and it sports a Zacks Rank of 1 currently. The company is expected to report quarterly numbers soon.
SB One Bancorp is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.85%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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