The industry backdrop has improved for the Finance sector. Recovery in oil prices and improving domestic economic factors has helped in alleviating the pressure. However, the low interest rate environment will continue to adversely impact the companies’ performance, as the Fed continues to maintain a dovish stance regarding the next rate hike. Nonetheless, an improving labor market with lower unemployment rate and a recovering housing market should support growth in the industry.
The S&P 500 finance stocks, which hold about 41.5% of the sector’s total market capitalization, have already released their quarterly results. The total earnings for these companies were up 4.6% year over year, on 4.7% higher revenues.
Performance of the companies so far reflects a substantial improvement over the prior quarter. Per the latest Zacks Earnings Preview report, overall earnings for the S&P 500 stocks in the Finance sector are expected to surge 12.1% year over year in the third quarter. This compares with a 5.2% decline in earnings in the previous quarter.
Our quantitative model offers some insights into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key ingredients, a positive Earnings ESP and a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). You can see the complete list of today’s Zacks Rank #1 stocks here.
Let’s see what’s in store for the following finance stocks that are expected to report third-quarter results on Oct 21.
Citizens Financial Group, Inc. (NYSE:CFG) : The Zacks Consensus Estimate of 50 cents for the company reflects a year-over-year increase of approximately 25%. While estimates have increased nearly 2% ahead of Citizens Financial’sthird-quarter results, we are not confident of an earnings beat as the company carries a Zacks Rank #3 with an Earnings ESP of 0.00%.
Notably, the company reported an average positive earnings surprise of 4.4% in the trailing four quarters.
South State Corporation (NASDAQ:SSB) : Estimates have been stable lately for South State Corporation, ahead of its quarterly results. The Zacks Consensus Estimate of $1.16 for the company reflects a year-over-year rise of 3.3%. However, the combination of a Zacks Rank #3 with an Earnings ESP of 0.00% makes surprise prediction difficult for this company as well. The company posted an average positive earnings surprise of 2.7% in the trailing four quarters.
TCF Financial Corporation (NYSE:TCB) : The Zacks Consensus Estimate of 30 cents reflects a year-over-year improvement of 5%. However, we are not confident about an earnings surprise call as the company has the combination of a Zacks Rank #3 and an Earnings ESP of 0.00%.
Notably, estimates have been stable lately, prior to the company’s third quarter earnings release. Nonetheless, the company has reported an average positive earnings surprise of 3.8% in the trailing four quarters.
Webster Financial Corp. (NYSE:WBS) : The Zacks Consensus Estimate has declined nearly 2% over the last 30 days. Further, the earnings estimate of 53 cents reflects a year-over-year decline of 1.7%.
Notably, the company holds a Zacks Rank #4 (Sell) along with an Earnings ESP of 0.00%. Thus, Webster Financialis not likely to report an earnings beat this quarter.
Furthermore,the company has an average negative surprise history in the trailing four quarters.
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TCF FINL CORP (TCB): Free Stock Analysis Report
WEBSTER FINL CP (WBS): Free Stock Analysis Report
CITIZENS FIN GP (CFG): Free Stock Analysis Report
SOUTH STATE CP (SSB): Free Stock Analysis Report
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