The widespread optimism surrounding the recovery in Europe and
China as well as political truce in the U.S. can also be felt in
the financial sector. Standing out as the most liquid market in the
world, the U.S. financial sector promises high growth and reduced
unemployment on increased economic activity. The industry also
offers an array of financial instruments and products for managing
risk, creating wealth and meeting financial needs.
Also, the sector remains in excellent shape with respect to
earnings. So far, 49.4% of the sector participants have reported
third-quarter results, which have been strong in terms of both beat
ratios (percentage of companies coming out with positive surprises)
Beat ratios for both earnings and revenues were pretty robust at
56.4% and 43.6%, respectively. Also, total earnings for the
companies have shown an impressive 13.0% year-over-year increase
despite a slight decline in revenues.
For a detailed look at the earnings outlook for this sector and
others, please read our
Given the positive sentiment, it might be a good idea to bet on a
handful of finance stocks that slated to report earnings for the
quarter ended Sep 30 in the coming days and are poised to beat
estimates. An earnings beat will add to investors' confidence in
these stocks, leading to rapid price appreciation.
The Way to Pick Right Stocks
Picking the most rewarding stocks within the finance sector might
be a tricky task unless one narrows down the list. One way to do
that is by choosing stocks that have the combination of a favorable
Zacks Rank - Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) - and
a positive Zacks Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks
that have high chances of surprising with their upcoming earnings
announcement. It shows the percentage difference between the Most
Accurate estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the
chance of a positive earnings surprise is as high as 70%.
Here are 3 finance stocks that have the right combination of
elements to deliver an earnings beat in the upcoming announcement.
Apollo Investment Corporation
) is a Zacks Rank #2 stock with an earnings ESP of +4.76%. The
Zacks Consensus Estimate for the fiscal second quarter 2014 is 21
cents per share.
Headquartered in New York City, Apollo Investment is a closed-end
investment company considered as a business development entity
under the Investment Company Act of 1940. The company provides
direct equity capital, mezzanine and senior secured loans, and
subordinated debt and loans mainly to middle-market private
The company has registered an average positive earnings surprise of
6.8% over the trailing 12 months.
is scheduled to announce its fiscal second-quarter 2014 results
before the opening bell on Nov 8.
Credit Acceptance Corporation
) carries a Zacks Rank #3 and has an earnings ESP of +0.77%. The
Zacks Consensus Estimate for the third quarter is $2.59 per share.
Based in Southfield, Michigan, Credit Acceptance Corporation is a
specialized financial services company which provides funding,
receivables management, collection, sales training and related
services to automobile dealers.
Credit Acceptance Corporation
is scheduled to announce its third-quarter 2013 results after the
market closes on Oct 30.
Nationstar Mortgage Holdings Inc.
) has a Zacks Rank #3 and an earnings ESP of +2.36%. The Zacks
Consensus Estimate for the third quarter is pegged at $1.27 per
Lewisville, Texas-based Nationstar Mortgage Holdings is a mortgage
lender. It offers servicing, origination, and real estate services
to financial institutions and consumers. The company's clientele
include national and regional banks, government organizations,
securitization trusts, private investment funds and other owners of
residential mortgage loans and securities.
Moreover, the company has registered an average positive earnings
surprise of 21.8% over the trailing 12 months.
Nationstar Mortgage Holdings
is expected to announce its third-quarter 2013 results on Nov 8.
Though the finance sector's growth has decelerated over the last
few quarters, all eyes are on it in third-quarter results. With an
expected 12.2% year-over-year growth in total earnings, investors
can look forward to strong momentum in the sector.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days.
Click to get this free report >>
APOLLO INV CP (AINV): Free Stock Analysis
CREDIT ACCEPT (CACC): Free Stock Analysis
NATIONSTAR MTGE (NSM): Free Stock Analysis
To read this article on Zacks.com click here.