Regions Financial Corporation
) to beat earnings expectations when it reports second-quarter 2014
results before the opening bell on Tuesday, Jul 22.
Why a Likely Positive Surprise?
Our proven model shows that Regions is likely to beat earnings
because it has the right combination of two key components.
Positive Zacks ESP:
, which represents the difference between the Most Accurate
Estimate and the Zacks Consensus Estimate, stands at +4.76%. This
is very meaningful and a leading indicator of a likely positive
earnings surprise for the company.
Zacks Rank #3 (Hold):
Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3
(Hold) have a significantly higher chance of beating earnings. The
Sell-rated stocks (#4 and 5) should never be considered going into
an earnings announcement.
The combination of Regions' Zacks Rank #3 and ESP of +4.76% make us
confident of an earnings beat on Jul 22.
Factors to Drive Q2 Results
The unfavorable macro issues may weigh on Regions' top line and
balance sheet in the quarter. Among others, a dismal mortgage
market, weak loan growth and stringent regulatory norms in a
persistently low interest rate environment are the primary
dampeners. Moreover, litigation costs related to recent settlements
might drive down profitability.
However, Regions has some encouraging traits that may support its
results. The company's favorable funding mix, improved core
business performance, its expansion mode and strategies are
impressive. It also aims to control costs and improve long-term
profitability. Then again, continued expense control and stable
balance sheets should act as tailwinds in the quarter.
In the last quarter, Regions delivered a positive earnings surprise
of 5.0%, driven by prudent expense management. This was the second
consecutive earnings beat reported by the company.
Activities of Regions during the third quarter of the year were
inadequate to win analysts' confidence. As a result, the Zacks
Consensus Estimate for the quarter remained stable at 21 cents per
share over the last 7 days.
Stocks That Warrant a Look
Regions is not the only firm looking up this earnings season. We
also anticipate earnings beat from some other companies in this
Discover Financial Services
) has an earnings ESP of +0.77% and a Zacks Rank #2 (Buy). It is
scheduled to report results on Jul 22.
Hancock Holding Company
) has an earnings ESP of +1.70% and carries a Zacks Rank #3 (Hold).
It is scheduled to report its second-quarter results on Jul 24.
) has an earnings ESP of +10.29% and carries a Zacks Rank #2. It is
scheduled to report its second-quarter results on Jul 24.
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