State Street Corporation
) is set to report first-quarter 2014 results on Apr 24 before
the opening bell. The company posted a 3.4% negative earnings
surprise in the last quarter. Let's see how things are shaping up
for this announcement.
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Factors to Influence Q1 Results
The overall market scenario remained sluggish and the interest
rate environment did not reverse in the quarter. Therefore, we
believe that State Street will report subdued net interest income
However, that is not expected to significantly dampen its top
line growth, as 77% of the company's revenue flow depends on fee
income (as of 2013). Now it depends on how the company has been
able to evade the sector challenges and performed on the
noninterest income front.
The company has been witnessing a rise in expenses despite
various cost saving initiatives in the last few quarters. We
don't expect the trend to reverse this quarter as well.
Moreover, the overall equity market could not maintain the pace
of growth in the quarter. We expect this to act favorably for the
company's exchange-traded fund (ETF) business with the tendency
of investors to shift toward less-risky instruments. Asset
inflows in this business are expected to show significant
improvement this quarter.
Nevertheless, the company failed to impress analysts with its
level of activities during the quarter. As a result, the Zacks
Consensus Estimate for the quarter remained unchanged at $1.0 per
share over the last 7 days.
Our proven model does not conclusively show that State Street is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this
to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for State Street is 0.00%. This is
because both the Most Accurate Estimate and the Zacks Consensus
Estimate stand at $1.00.
Zacks Rank: State Street's Zacks Rank #3 increases the predictive
power of ESP. But we also need to have a positive ESP to be
confident of an earnings surprise call.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
Tompkins Financial Corp.
) has an Earnings ESP of 1.21% and carries a Zacks Rank #2 (Buy).
It is scheduled to report first-quarter results on Apr 25.
) has an Earnings ESP of 8.33% and holds a Zacks Rank #1 (Strong
Buy). The company is expected to release first-quarter results on
Another regional bank
The PNC Financial Services Group, Inc.
) posted earnings beat this quarter. Our proven model predicted
that PNC Financial would deliver a positive earnings surprise as
it had the right combination of two key ingredients.