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Fee Income Growth to Support Citizens (CFG) in Q1 Earnings
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Citizens Financial Group (CFG - Free Report) is scheduled to report first-quarter 2020 results on Apr 17, before market open. While its revenues are expected to have improved year over year, earnings might have declined.
Before we look at the factors that might have influenced first-quarter earnings, let’s see how the company performed in the past quarters.
In fourth-quarter 2019, this Providence, RI-based bank displayed organic growth. Rise in revenues and a strong capital position were the key positives. However, expenses and provisions witnessed a rise.
Citizens surpassed estimates in each of the trailing four quarters, the average beat being 3.24%.
Net Interest Income (NII) Lower: A decent lending scenario, mainly in the commercial & industrial loans front, is expected to have supported interest income during the quarter.
Also, the Zacks Consensus Estimate for average interest earning assets of $149.9 billion for the quarter indicates a 3% improvement from the year-ago reported quarter.
However, a decline in interest rates in October 2019 and again in March to near-zero level as a move to protect the economy from the impacts of the coronavirus outbreak are likely to have hurt the company’s net interest margin, thereby impacting NII.
The Zacks Consensus Estimate of $1.12 billion for NII suggests a 3.2% year-over-year fall.
Capital Market Fees Muted: While debt issuances were muted as loan demand was soft, IPOs were a bright spot. Also, overall weak equity market performance during the quarter resulted in a decline in follow-up equity issuances.
Further, global M&A activity during the first quarter was significantly hampered due to the coronavirus outbreak. Thus, Citizens’ advisory fees are likely to have been negatively impacted. The consensus estimate for capital market fees of $55 million indicates a marginal rise.
Fee Income Rises: Per the Fed’s data, deposits improved in the first quarter and are likely to have aided Citizens in bagging higher service charges and fees. Further, the trend of consumer spending was decent during the quarter, which is likely to have provided some support to the company’s top line. The consensus estimate for card fees of $62 million indicates a 5.1% increase.
Due to lower mortgage rates, mortgage refinancing activities and fresh originations picked pace in the quarter, as a result of which, Citizens is expected to have witnessed higher mortgage banking fees. The Zacks Consensus Estimate for the same is pegged at $104 million, indicating a substantial rise.
However, given the weak equity markets, trust and investment services fees are expected to have declined.
Given the expectations of rise in most components, the Zacks Consensus Estimate for non-interest income is pegged at $507 million, suggesting an 18.5% rise year over year.
Expenses Higher: Despite its TOP 6 efficiency initiatives, Citizens’ expenses are expected to have increased due to investments in enhanced data analytics and technology to improve customer experience.
Earnings Whispers
Citizens does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds 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: Earnings ESP for Citizens is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for its earnings for the quarter is pegged at 20 cents, which suggests a decline of 78.5% from the year-ago reported number. However, the consensus estimate for sales of $1.61 billion indicates 1.2% growth.
Stocks to Consider
Here are some finance stocks that 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.
CURO Group Holdings Corp. is slated to release quarterly results on May 4. The company has an Earnings ESP of +1.47% and currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Virtu Financial, Inc. (VIRT - Free Report) is scheduled to report quarterly earnings on May 7. The company, which sports a Zacks Rank of 1 at present, has an Earnings ESP of +41.57%.
SB ONE BANCORP is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.56%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Fee Income Growth to Support Citizens (CFG) in Q1 Earnings
Citizens Financial Group (CFG - Free Report) is scheduled to report first-quarter 2020 results on Apr 17, before market open. While its revenues are expected to have improved year over year, earnings might have declined.
Before we look at the factors that might have influenced first-quarter earnings, let’s see how the company performed in the past quarters.
In fourth-quarter 2019, this Providence, RI-based bank displayed organic growth. Rise in revenues and a strong capital position were the key positives. However, expenses and provisions witnessed a rise.
Citizens surpassed estimates in each of the trailing four quarters, the average beat being 3.24%.
CITIZENS FINANCIAL GROUP, INC. PRICE AND EPS SURPRISE
Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote
Factors at Play
Net Interest Income (NII) Lower: A decent lending scenario, mainly in the commercial & industrial loans front, is expected to have supported interest income during the quarter.
Also, the Zacks Consensus Estimate for average interest earning assets of $149.9 billion for the quarter indicates a 3% improvement from the year-ago reported quarter.
However, a decline in interest rates in October 2019 and again in March to near-zero level as a move to protect the economy from the impacts of the coronavirus outbreak are likely to have hurt the company’s net interest margin, thereby impacting NII.
The Zacks Consensus Estimate of $1.12 billion for NII suggests a 3.2% year-over-year fall.
Capital Market Fees Muted: While debt issuances were muted as loan demand was soft, IPOs were a bright spot. Also, overall weak equity market performance during the quarter resulted in a decline in follow-up equity issuances.
Further, global M&A activity during the first quarter was significantly hampered due to the coronavirus outbreak. Thus, Citizens’ advisory fees are likely to have been negatively impacted. The consensus estimate for capital market fees of $55 million indicates a marginal rise.
Fee Income Rises: Per the Fed’s data, deposits improved in the first quarter and are likely to have aided Citizens in bagging higher service charges and fees. Further, the trend of consumer spending was decent during the quarter, which is likely to have provided some support to the company’s top line. The consensus estimate for card fees of $62 million indicates a 5.1% increase.
Due to lower mortgage rates, mortgage refinancing activities and fresh originations picked pace in the quarter, as a result of which, Citizens is expected to have witnessed higher mortgage banking fees. The Zacks Consensus Estimate for the same is pegged at $104 million, indicating a substantial rise.
However, given the weak equity markets, trust and investment services fees are expected to have declined.
Given the expectations of rise in most components, the Zacks Consensus Estimate for non-interest income is pegged at $507 million, suggesting an 18.5% rise year over year.
Expenses Higher: Despite its TOP 6 efficiency initiatives, Citizens’ expenses are expected to have increased due to investments in enhanced data analytics and technology to improve customer experience.
Earnings Whispers
Citizens does not have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds 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: Earnings ESP for Citizens is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for its earnings for the quarter is pegged at 20 cents, which suggests a decline of 78.5% from the year-ago reported number. However, the consensus estimate for sales of $1.61 billion indicates 1.2% growth.
Stocks to Consider
Here are some finance stocks that 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.
CURO Group Holdings Corp. is slated to release quarterly results on May 4. The company has an Earnings ESP of +1.47% and currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Virtu Financial, Inc. (VIRT - Free Report) is scheduled to report quarterly earnings on May 7. The company, which sports a Zacks Rank of 1 at present, has an Earnings ESP of +41.57%.
SB ONE BANCORP is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.56%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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