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Why is an Earnings Beat Less Likely for Zions (ZION) in Q1?

·5 min read

Zions Bancorporation ZION is scheduled to report first-quarter 2022 results on Apr 25, after market close. The overall loan demand was impressive in the to-be-reported quarter. Specifically, growth in commercial and industrial loan balances (which constitute a large part of Zions’ loan portfolio) was decent.

The Zacks Consensus Estimate for the company’s average interest-earning assets for the first quarter is pegged at $87.9 billion, which indicates a rise of 1.6% from the previous quarter’s reported number.

While a rise in loan balances is expected to have aided Zions’ net interest income (NII), its main revenue component, in the quarter, relatively lower interest rates (despite the Federal Reserve hiking rates by 25 basis points in mid-March) are likely to have offset growth for the same to some extent. Hence, the company’s NII growth is not expected to have been impressive. The consensus estimate for first-quarter NII of $547 million indicates a decline of 1.1% sequentially.

Other Key Factors and Estimates for Q1

Fee Revenues: From the beginning of 2022, there were heightened speculations that the Fed would raise rates in March (as it happened). Thus, there was a rush for mortgage originations and refinancing activities in the early part of the to-be-reported quarter.

On the whole, mortgage rates increased sequentially and likewise, mortgage originations and refinancing activities decreased. These factors are likely to have weighed on the overall mortgage banking business. Thus, due to the not-so-impressive mortgage-banking business performance, Zions’ loan sales and servicing income are not expected to have improved in the quarter. The Zacks Consensus Estimate for the same is pegged at $20.34 million, suggesting a 7.5% decline from the previous quarter’s reported number.

The consensus estimate for commercial account fees of $33.80 million indicates a marginal decline sequentially. Similarly, the consensus estimate for card fees of $23.76 million suggests a decline of 5% from the prior quarter.

The consensus estimate for retail and business banking fees is pegged at $18.60 million, suggesting a 2.1% decline sequentially. The estimate for capital markets and foreign exchange fees of $17.76 million indicates a fall of 26% sequentially.

Due to the expected fall in almost all components, customer-related fee (accounting for more than 85% of Zions’ total non-interest income) is anticipated to have declined in the quarter. The consensus estimate for the same is pegged at $142 million, which indicates a fall of 6.6% from the previous quarter’s reported figure.

The consensus estimate for dividends and other income is pegged at $7.23 million, indicating a decline of 61.9% from the previous quarter’s reported number.

The consensus estimate for total non-interest income indicates that the component will decline in the quarter. The estimate is pegged at $150 million, suggesting a fall of 21.1% from the previous quarter.

Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. As the company continues to invest in franchise, overall costs are expected to have been elevated in the first quarter.

Asset Quality: The Zacks Consensus Estimate for total non-performing loans is pegged at $276 million, suggesting a 1.8% rise from the prior quarter’s reported figure.

What Our Quantitative Model Predicts

According to our quantitative model, the chances of Zions 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 a Zacks Rank #3 (Hold) or better.

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

Earnings ESP: The Earnings ESP for Zions is -1.91%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Q1 Earnings & Sales Growth Expectations

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.15 per share, which suggests a decline of 39.5% from the year-ago quarter’s reported number. The estimate has increased 1.8% over the past 30 days.

The consensus estimate for sales is pegged at $703.3 million, which indicates a decline of 2.6% from the prior-year reported figure.

Zions Bancorporation, N.A. Price and EPS Surprise

Zions Bancorporation, N.A. Price and EPS Surprise
Zions Bancorporation, N.A. Price and EPS Surprise

Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote

Stocks That Warrant a Look

A couple of finance stocks, which you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases per our model, are Northern Trust Corporation NTRS and Independent Bank Corporation IBCP.

The Earnings ESP for NTRS is +0.06%. Northern Trust carries a Zacks Rank #3 at present. NTRS is slated to report results on Apr 26.

IBCP is scheduled to release quarterly results on Apr 26. IBCP currently has a Zacks Rank #2 and an Earnings ESP of +10.00%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Northern Trust Corporation (NTRS) : Free Stock Analysis Report

Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report

Independent Bank Corporation (IBCP) : Free Stock Analysis Report

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