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What to Expect From Fifth Third (FITB) This Earnings Season

Zacks Equity Research

Fifth Third Bancorp FITB is scheduled to report second-quarter 2019 results on Jul 23, before the opening bell. The company is expected to report year-over-year growth in revenues and earnings.

Notably, the Cincinnati, OH-based lender has an impressive earnings surprise history. It topped earnings in each of the trailing four quarters, the average positive earnings surprise being 5.5%.

In the last reported quarter, the bank’s earnings surpassed the Zacks Consensus Estimate. Results were supported by increase in net interest income and a strong capital position. However, rise in expenses and provisions were undermining factors.

Fifth Third Bancorp Price and EPS Surprise

Fifth Third Bancorp Price and EPS Surprise

Fifth Third Bancorp price-eps-surprise | Fifth Third Bancorp Quote

Factors to Influence Q2 Results

Net Interest Income (NII) Might Disappoint: Per the Fed’s latest data, rise in loans is likely to be low on a sequential basis for the June-ended quarter. Particularly, weakness in revolving home equity loans, commercial and industrial, and commercial real estate loans might offset growth in consumer loans. This is expected to adversely impact NII.

Moreover, the net interest margin might be affected by the flattening of yield curve, the Fed’s accommodative policy stance and steadily rising deposit betas.

Fee Income to Rise: Fifth Third’s focus on strengthening its fee income base through the North Star initiatives is likely to have lent support. Moreover, the trend of consumer spending was strong during the quarter under review, which is likely to boost the bank’s credit and debit card revenues. Also, pickup in mortgage banking revenues, on account of lower rates during the quarter, is expected to have lent support.

The company expects non-interest income to be up 17-18% from the adjusted first-quarter figure. Notably, corporate banking revenues are likely to increase nearly 20% on a year-over-year basis.

Expenses Might Rise Slightly: Fifth Third’s ongoing strategic investments in several areas, such as technology, might escalate expenses. However, the company is expected to have been successful in offsetting this rise through its North Star initiatives to some extent.

For the quarter, the company expects non-interest expenses to reflect rise of 10-12% sequentially, on an adjusted basis.

Here is what our quantitative model predicts:

Our proven model shows that the company does not has the combination of the two key ingredients for a possible earnings beat — a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).

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

Earnings ESP:Earnings ESP for Fifth Third is -1.27%.

Zacks Rank:The stock currently carries a Zacks Rank of 3.  

Notably, the Zacks Consensus Estimate for earnings of 66 cents suggests a 4.8% jump from the year-ago reported figure. Also, the consensus estimate for sales of $1.9 billion indicates 7.5% rise.

Stocks That Warrant a Look

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

Ares Capital Corporation ARCC is slated to release results on Jul 30. The company has an Earnings ESP of +1.02% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for UMB Financial Corporation UMBF is +0.06% and it also carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jul 30.

BOK Financial Corporation BOKF is scheduled to release results on Jul 24. The company has an Earnings ESP of +1.16% and carries a Zacks Rank #3.

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