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LendingClub (LC) to Report Q2 Earnings: What's in Store?

LendingClub Corporation LC is slated to announce second-quarter 2017 results on Aug 7, after the market closes. Its earnings and revenues are projected to grow year over year.

Last quarter, the company reported narrower-than-expected loss. However, the quarter witnessed higher expenses and a decline in revenues.

Looking at LendingClub’s earnings surprise history, the company beat estimates in three of the trailing four quarters. However, dismal performance in the remaining quarter led to an average negative surprise of 21.7%.

The company’s price performance does not seem to be impressive either. The stock has lost 3.1% year to date compared with 6.9% growth of the industry it belongs to.

LendingClub Corporation Price and EPS Surprise
 

LendingClub Corporation Price and EPS Surprise | LendingClub Corporation Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat this time around. This is because the stock does not have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, which is required to increase the chances 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: The Earnings ESP for LendingClub is 0.00%. This is because the Most Accurate Estimate, which is a loss of 6 cents, is in line with the Zacks Consensus Estimate.

Zacks Rank: LendingClub has a Zacks Rank #4 (Sell), which further decreases the predictive power of ESP.

Notably, the Zacks Consensus Estimate of a loss of 6 cents remained unchanged in the last seven days.

Factors to Influence Q2 Results

LendingClub’s primary source of revenues is transaction fees on loans, which it helps to issue and subsequently lists online for investors to fund. Since loan originations in the quarter were not substantial, we don’t expect transaction fees to significantly contribute to revenues.

However, the company’s investments in channel diversification and ability to offer affordable credit to a wide spectrum of borrowers should continue to support overall revenue growth.

Management projects total net revenues in the second quarter to be in the range of $132–$137 million, up nearly 30% year over year, driven by multiple borrower initiatives, continued strong demand from both borrowers and investors, and seasonal benefits typically seen in the second quarter.

The company incurs significant expenditure for selling and marketing its products. For the to-be-reported quarter, LendingClub projects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margins to be at breakeven with some variability on either side. In the first-quarter, the company reported EBITDA margin of 0.1%.

Management expects net loss in the range of $30–$35 million for the quarter compared with the year ago loss of $81.4 million.

Stocks that Warrant a Look

Here are a few finance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Condor Hospitality Trust Inc. CDOR is slated to come up with results on Aug 7. The company has an Earnings ESP of +16.00% and a Zacks Rank #3.

Janus Henderson Group plc JHG is expected to report results on Aug 8. It has an Earnings ESP of +5.66% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Financial Engines, Inc. FNGN has an Earnings ESP of +4.00% and a Zacks Rank #2 (Buy). It is also expected to report results on Aug 8.

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LendingClub Corporation (LC): Free Stock Analysis Report
 
Financial Engines, Inc. (FNGN): Free Stock Analysis Report
 
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Janus Capital Group, Inc (JHG): Free Stock Analysis Report
 
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