Why is Earnings Beat Less Likely for Robinhood (HOOD) in Q3?
Robinhood Markets, Inc. HOOD is scheduled to report third-quarter 2021 results on Oct 26, after market close.
In the last reported quarter, the company recorded year-over-year growth in revenues, driven by a rise in transaction-based revenues, net interest revenues and other revenues. Total operating expenses also witnessed a substantial rise, which hurt results to an extent.
The Zacks Consensus Estimate for the company’s third-quarter earnings is a loss of $1.33 per share. The estimate has been unchanged over the past seven days.
The consensus estimate for total sales is pegged at $441.2 million, which indicates a 63.4% rise from the year-ago quarter’s reported figure.
Notably, Robinhood announced its IPO on Jul 28 this year. The company’s shares began trading on the Nasdaq Global Select Market the next day.
Management Expectations for 3Q21
The company expects seasonal headwinds and lower trading activity across the industry to result in lower revenues and fewer new funded accounts compared with the previous quarter.
As the company continues to invest in key areas to enhance platform capabilities, drive product innovation and improve customer support as well as build upon regulatory and compliance functions, overall costs are anticipated to remain elevated. Management expects to record a one-time cumulative charge of $1 billion in stock-based compensation for restricted stock units related to its IPO in the quarter.
Earnings Whispers
According to our quantitative model, the chances of Robinhood beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better, which is required to be confident of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Robinhood has an Earnings ESP of -21.51%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Stocks to Consider
Here are a few finance stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat in their upcoming releases.
Capital One Financial Corporation COF is slated to report quarterly earnings on Oct 26. The company, with a Zacks Rank of 2 at present, has an Earnings ESP of +4.66%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for First Interstate BancSystem, Inc. FIBK is +4.46%. This Zacks #3 Ranked company is also scheduled to report quarterly numbers on Oct 26.
Civista Bancshares, Inc. CIVB is scheduled to release results on Oct 27. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +5.32%.
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Capital One Financial Corporation (COF) : Free Stock Analysis Report
First Interstate BancSystem, Inc. (FIBK) : Free Stock Analysis Report
Civista Bancshares, Inc. (CIVB) : Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
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