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Is a Beat in Store for Huntington (HBAN) in Q2 Earnings?

Huntington Bancshares Incorporated HBAN is scheduled to report second-quarter 2017 results on Jul 21, before the market opens. The company’s earnings and revenues are expected to grow on a year-over-year basis.

The company topped earnings estimates in three of the trailing four quarters, with an average positive surprise of 2.3%.

In the last quarter, the company lagged the Zacks Consensus Estimate due to elevated expenses and higher provision for credit losses. However, increased revenues along with growth in loan balances were the positives.

Huntington’s shares have gained 3.7% year to date, outperforming the Zacks Banks - Midwest industry’s fall of 1.7%.

Huntington Bancshares Incorporated Price and EPS Surprise

Will the stock be able to maintain this uptrend post second-quarter earnings release? It majorly depends on whether the firm is able to impress the market with the results.

Why a Likely Positive Surprise?

According to our proven model, Huntington has the right combination of two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +4.35%. This is a major indicator of a likely positive earnings surprise.

Zacks Rank: Huntington’s Zacks Rank #3 when combined with a positive ESP makes us reasonably confident of an earnings beat.

Factors to Drive Better-than-Expected Results

Revenues Might Grow: Revenues are likely to increase in line with the company’s long-term financial goals. There are synergies of the FirstMerit acquisition to support.

Alleviated Margin Pressure: The latest hike in interest rates might be successful in easing margin pressure to some extent. However, the contraction in the three-month/10-year Treasury spread might offset some benefits.

Loan Growth: Though the quarter witnessed slow loan growth due to the lack of any tangible progress on the regulatory reform front, slight growth in loan balances can be witnessed due to the optimism prevailing in the market. Management expects loan growth to be in the range of 4–6% in 2017.

Manageable Expenses: Though management remains focused on controlling expenses, we are apprehensive about the company’s continued investments. Huntington anticipates implementing cost savings related to the acquisition of FirstMerit Corporation. Also, there were no major outflows related to legal settlements that might impact the firm’s earnings unusually in the to-be-reported quarter.

Huntington’s activities during the quarter, however, failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 23 cents, over the last seven days.

Other Stocks that Warrant a Look

Here are some other stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings in their upcoming releases.

Citizens Financial Group, Inc. CFG is slated to report second-quarter results on Jul 21. It has an Earnings ESP of +1.70% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fifth Third Bancorp’s FITB Earnings ESP is +2.38% and it carries a Zacks Rank #3. The company is expected to release second-quarter results on Jul 21.

Old National Bancorp ONB has an Earnings ESP of +3.70% and a Zacks Rank #2. It is scheduled to report second-quarter results on Jul 25.

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