Will Regions (RF) Deliver Earnings Beat Again This Season? - Analyst Blog


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We expect Regions Financial Corporation ( RF ) 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: Earnings 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 industry:

Discover Financial Services ( DFS ) 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 ( HBHC ) 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.

Popular, Inc. ( BPOP ) 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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REGIONS FINL CP (RF): Free Stock Analysis Report

DISCOVER FIN SV (DFS): Free Stock Analysis Report

POPULAR INC (BPOP): Free Stock Analysis Report

HANCOCK HLDG CO (HBHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: RF , DFS , BPOP , HBHC

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