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Will BB&T Corp (BBT) Beat Q2 Earnings Estimates?

Zacks Equity Research

BB&T Corporation (BBT) is scheduled to reports its second-quarter 2014 results on Monday, Jul 21, before the opening bell.

In the preceding quarter, BB&T delivered a negative earnings surprise of 2.8% due to continued pressure on top line. However, this was mitigated to some extent by prudent expense management.

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

Factors to Impact Q2 Results

The overall tough industry backdrop which continued during the quarter will likely pressurize revenue growth. We do not expect any remarkable improvement in BB&T’s interest income given the persistent low-rate environment as well as sluggish loan demand.

Further, management anticipates a decline in net interest margin to continue in the quarter. Additionally, BB&T’s non-interest income will mostly remain subdued due to lower mortgage-banking revenues.

On the expense front, management expects operating costs to decline. However, as BB&T continues to grow inorganically (acquisition of Woodbury & Co and Citibank branches), we believe that overall expenses will likely remain elevated in the quarter.

Nevertheless, BB&T’s credit quality is expected to remain strong. With the overall economic recovery (albeit slow), provision for credit losses should fall in the quarter.

BB&T’s activities during the quarter were not sufficient to win analysts’ confidence. As a result, the Zacks Consensus Estimate remained unchanged at 75 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 BB&T is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 75 cents.

Zacks Rank: BB&T’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 Regions Financial Corporation (RF) is +4.76% and it has a Zacks Rank #3. The company is slated to report on Jul 22.

Popular, Inc. (BPOP) has an Earnings ESP of +10.29% and carries a Zacks Rank #2. It is scheduled to report results on Jul 24.

The Earnings ESP for Hancock Holding Company (HBHC) is +1.75% and it carries a Zacks Rank #3. The company is scheduled to release results on Jul 24.

Read the Full Research Report on BBT
Read the Full Research Report on RF
Read the Full Research Report on BPOP
Read the Full Research Report on HBHC

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