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Will Wintrust (WTFC) be Able to Keep Earnings Streak Alive?

Wintrust Financial Corporation (WTFC) is scheduled to reports its third-quarter 2014 results on Thursday Oct 16, after the market close.

In the preceding quarter, Wintrust delivered a positive earnings surprise of 5.6% driven by a rise in net interest income. This was partially offset by lower fee income and an increase in operating expenses. This was the company’s fourth consecutive earnings beat, with an average surprise of 4.5%.

Will Wintrust be able to beat the estimates this time around? Let us see how things have shaped up for this announcement.

Factors to Impact Q3 Results

During the quarter, Wintrust completed a deal to acquire 11 branch offices and related deposits (nearly $360 million as of Jul 31, 2014) in Wisconsin from Talmer Bancorp, Inc. (TLMR). Despite being a deposit only acquisition, management anticipates loan growth from these branches to drive net interest income.

However, the overall tough industry backdrop during the quarter should continue to pressurize revenue growth. We do not expect any remarkable improvement in Wintrust’s interest income given the persistent low-rate environment.

Additionally, growth in non-interest income will mostly remain subdued due to lower mortgage-banking revenues and trading losses. Nonetheless, growth in wealth management income should partially offset these headwinds.

Further, as Wintrust continues to grow inorganically we believe that non-interest expenses should remain elevated in the quarter. Salary and employee benefit costs are also expected to remain higher.

Wintrust’s activities during the quarter were not sufficient to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged at 78 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that KeyCorp is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Wintrust is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 78 cents.

Zacks Rank: Wintrust’s Zacks Rank #3 increases the predictive power of ESP. But we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks to Consider

Here are a few bank stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Earnings ESP for PrivateBancorp, Inc. (PVTB) is +2.13% and it has a Zacks Rank #1. The company is slated to report on Oct 16.

BB&T Corporation (BBT) has an earnings ESP of +1.41% and carries a Zacks Rank #3. It is scheduled to report third-quarter results on Oct 16.

Read the Full Research Report on BBT
Read the Full Research Report on WTFC
Read the Full Research Report on PVTB
Read the Full Research Report on TLMR


Zacks Investment Research

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