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What's in the Cards for Fifth Third (FITB) in Q4 Earnings?

Zacks Equity Research

Fifth Third Bancorp FITB is scheduled to report fourth quarter and 2017 results before the opening bell on Jan 23. While the company is expected to witness year-over-year growth in revenues, earnings might decline.

However, the company has a decent earnings surprise history. It topped earnings in two of the trailing four quarters with an average positive earnings surprise of 5.3%.

In the last quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Results were supported by higher net interest income and lower provisions. However, lower non-interest income was an undermining factor.

Fifth Third’s shares gained 8.4% in the three-month period ended Dec 31, 2017, outperforming the industry’s rally of 8.2%.

Fifth Third Bancorp Price and EPS Surprise

Fifth Third Bancorp Price and EPS Surprise | Fifth Third Bancorp Quote

Will the upcoming earnings release give a boost to Fifth Third’s stock? That depends largely on whether the firm is able to impress market with its fourth-quarter results.

Factors to Influence Q4 Results

Expenses Might Increase Slightly: Fifth Third’s ongoing strategic investments in several areas, such as technology, will increase expenses. However, the company might be successful in offsetting the expense rise through its North Star initiatives to some extent.

Net Interest Income (NII) to Improve: The quarter witnessed a moderate improvement in lending — particularly on the consumer front. Thus, loan growth, combined with a rise in interest rates, is likely to boost the company’s NII.

The Zacks Consensus Estimate for revenues of $1.58 billion indicates 3.1% year-over-year growth.

Fee Income Might Remain Flat: Fifth Third’s focus on strengthening its fee income base through North Star initiatives is likely to lend support. Also, higher credit card revenues due to seasonality along with improved investment banking business will increase the non-interest income. However, poor mortgage banking revenues during the quarter are likely to offset the positives.

Let’s have a look at what our quantitative model predicts:

Our proven model doesn’t conclusively show that Fifth Third will be able to beat the Zacks Consensus Estimate this time around, as it does not have the right combination of two key ingredients. Note that a stock with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better has significantly higher chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Fifth Third is -1.13%.

Zacks Rank: Fifth Third carries a Zacks Rank of 3.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

Associated Banc-Corp ASB is slated to report results on Jan 25. It has an Earnings ESP of +0.64% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

T. Rowe Price Group TROW has an Earnings ESP of +1.49% and carries a Zacks Rank of 1. It is scheduled to report results on Jan 30.

Federated Investors’ FII Earnings ESP is +0.86% and it sports a Zacks Rank of 1. The company is expected to release fourth-quarter and 2017 results on Jan 25.

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Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Associated Banc-Corp (ASB) : Free Stock Analysis Report
 
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
 
Federated Investors, Inc. (FII) : Free Stock Analysis Report
 
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