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Fifth Third (FITB) to Post Q3 Earnings: Is a Beat in Store?

Fifth Third Bancorp FITB is scheduled to report third-quarter 2017 results before the opening bell on Oct 24. The company might witness a year-over-year decline in revenues and earnings this time around.

However, the company boasts an impressive earnings surprise history. It topped earnings in three of the trailing four quarters with an average positive earnings surprise of 19.9%.

In the last quarter, the company surpassed the Zacks Consensus Estimate driven by higher net interest income and lower provisions. However, lower non-interest income was an undermining factor.

Fifth Third’s shares have gained 12.9% over the past six months, outperforming the industry’s rally of 10.5%.

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Fifth Third Bancorp Price and EPS Surprise

Fifth Third Bancorp Price and EPS Surprise | Fifth Third Bancorp Quote

Will the stock be able to maintain this uptrend post third-quarter earnings release? It majorly depends on whether the firm is able to impress the market with its results.

Why a Likely Positive Surprise?

According to our proven model, Fifth Third has the right combination of two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase 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.

Zacks ESP: The Earnings ESP for Fifth Third is +0.25%.

Zacks Rank: Fifth Third currently carries a Zacks Rank #2 (Buy).

Factors to Affect Q3 Results

Expenses Might Remain Flat: Fifth Third’s ongoing strategic investments in several areas, such as technology, will increase expenses. However, the company might be successful in offsetting the expense growth through its North Star initiatives.

Revenues Might Decline: Owing to low volatility in the market and lack of sufficient mortgage banking activities, Fifth Third’s fee income is likely to decline. Also, weak loan growth during the quarter might impact net interest income.

The Zacks Consensus Estimate for revenues of $1.55 billion indicates an 11.5% year-over-year decline.

Alleviated Pressure on Net Interest Margin (NIM): The interest rate hike by the Federal Reserve in June 2017 is likely to have a full-quarter impact and should ease some margin pressure. However, higher deposit costs will likely offset this benefit to some extent. Management expects NIM to expand 2 basis points on a sequential basis.

Other Stocks That Warrant a Look

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

Franklin Resources, Inc. BEN has an Earnings ESP of +0.56% and a Zacks Rank #2 (Buy). It is slated to report third-quarter results on Oct 26.

Santander Consumer USA Holdings Inc.’s SC Earnings ESP is +6.54% and it carries a Zacks Rank of 2. The company is expected to release third-quarter results on Oct 27.

Lazard Ltd. LAZ has an Earnings ESP of +1.39% and a Zacks Rank #1 (Strong Buy). It is scheduled to report third-quarter results on Oct 26. You can seethe complete list of today’s Zacks #1 Rank stocks here.

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Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Santander Consumer USA Holdings Inc. (SC) : Free Stock Analysis Report
 
Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
 
Lazard Ltd. (LAZ) : Free Stock Analysis Report
 
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