Can Citizens (CFG) Maintain its Earnings Beat Streak in Q4?

Citizens Financial Group CFG is scheduled to report fourth quarter and 2017 results on Jan 19, before the market opens. The company is expected to witness year-over-year growth in revenues and earnings.

Further, Citizens Financial boasts an impressive surprise history. It surpassed earnings estimates in each of the trailing four quarters, with an average beat of 9.1%.

The Providence, RI-based bank’s organic growth was reflected in third-quarter 2017 results, which witnessed continued rise in loan balances and higher revenues. Also, the company recorded lower expenses and improved credit quality.

Citizens Financial’s fourth-quarter results are expected to benefit from rising interest income and prudent expense management efforts. The Zacks Consensus Estimate for the to-be-reported quarter earnings of 67 cents indicates a 21.8% year-over-year improvement.

Citizens Financial Group, Inc. Price and EPS Surprise

Citizens Financial Group, Inc. Price and EPS Surprise | Citizens Financial Group, Inc. Quote

Factors That Might Drive Better-Than-Expected Results

Higher Net Interest Income (NII): The fourth quarter was decent in terms of consumer loan growth and higher interest rates, hence Citizens Financial’s NII is likely to increase. The Zacks Consensus Estimate for NII of $1.07 billion reflects 8.5% growth year over year.

Moreover, estimates for average interest-earning assets of $138.8 billion reflect a 3% increase from the year-ago quarter.

Controlled Expenses: Citizens Financial’s expenses are expected to continue declining due to its TOP IV efficiency initiative. Also, its self-funding revenue initiatives might help in lowering the efficiency ratio.

The consensus estimate for efficiency ratio is 0.60%, down 2 basis points year over year.

Fee Income Might Improve: Fee income is likely to have increased in the fourth quarter due to improved investment banking activities. The consensus estimate for Trust & Investment Management Fees of $36.5 million indicates a 7.2% increase.

Overall, non-interest income is projected to climb 3.2% to $389 million in the fourth quarter.

Mortgage Banking Likely to Decline: With refinancing boom nearing its end and seasonality playing as added factor, mortgage banking revenues are expected to decline during the quarter. The consensus estimate for mortgage banking revenues is $27.9 million, reflecting 22.6% decline year over year.

Why a Likely Positive Surprise?

Our proven model shows that Citizens Financial 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: Earnings ESP for Citizens Financial is +0.04%.

Zacks Rank: Citizens Financial currently carries a Zacks Rank #2 (Buy).

Other Stocks That Warrant a Look

Here are some other stocks you may want to consider, as they have the right combination of elements to post an earnings beat in their upcoming releases.

The Bank of New York Mellon Corporation BK is slated to release fourth-quarter results on Jan 18. It has an Earnings ESP of +0.16% and carries a Zacks Rank of 3.

Associated Banc-Corp ASB is slated to report results on Jan 25. It has an Earnings ESP of +0.64% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

T. Rowe Price Group TROW has an Earnings ESP of +1.49% and carries a Zacks Rank of 2. It is scheduled to report results on Jan 30.

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