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Can Loan Growth Aid Enova International (ENVA) Q2 Earnings?

Zacks Equity Research

Enova International ENVA is scheduled to report second-quarter 2019 results on Jul 25, after market close. The company is expected to witness year-over-year growth in revenues and earnings.

In the last reported quarter, the Chicago, IL-based online financial services provider displayed organic growth. Continued rise in revenues and loan growth were the key highlights. However, the results were partially offset by higher expenses.

Notably, Enova boasts an impressive surprise history. It surpassed earnings estimates in three of the trailing four quarters, the average beat being 8.2%.

Enova International, Inc. Price and EPS Surprise

Enova International, Inc. Price and EPS Surprise

Enova International, Inc. price-eps-surprise | Enova International, Inc. Quote

However, the company’s activities in the second quarter were inadequate to impress analysts. As a result, the Zacks Consensus Estimate for earnings of 63 cents has been stable over the past seven days. Nonetheless, the figure indicates growth of 6.8% from the year-ago reported number.

Moreover, the consensus estimate for revenues of $281.9 million suggests a rise of 11.3% from the prior-year quarter.

Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to impact second-quarter results.

Factors at Play

Growth in Loans: The company’s efforts to grow loan portfolio by increasing awareness of its products are likely to have attracted new customers, and thus result in higher loans originations in this quarter as well. Also, it is likely to have benefited from decent consumer lending scenario.

Foreign Exchange Fluctuations Might Impact Revenues: The company remains exposed to foreign exchange risks as it has businesses in the United Kingdom and Brazil. Thus, weakness in the British pound sterling during the quarter on account of Brexit might result in lower international revenues of which more than 80% is generated from the United Kingdom.

Overall Revenues to Rise: Given the expectations of rise in loan, overall revenues are likely to increase during the quarter. Notably, management expects total revenues in the range of $265-$285 million for the second quarter compared with $253 million earned in year-ago quarter.

Expenses to be High: Enova’s expenses are likely to escalate due to its efforts to attract new customers, and marketing of new and existing products.

Earnings Whispers

According to our quantitative model, we cannot conclusively predict an earnings beat for Enova in the upcoming results. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen, which is not the case here as elaborated below.

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

Earnings ESP: Enova has an Earnings ESP of 0.00%.

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

Stocks That Warrant a Look

Here are some stocks worth considering, as they 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. It presently has an Earnings ESP of +1.02% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

The Earnings ESP for Franklin Resources, Inc. BEN is +0.13% and the stock flaunts a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Jul 30.

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