Wintrust Financial Corporation (WTFC) is scheduled to report its fourth-quarter and full year 2014 results on Thursday, Jan 15, after market close.
In the third quarter, Wintrust delivered a positive earnings surprise of 1.28% driven by a rise in both net interest income and non interest income. This was partially offset by higher operating expenses. This marked the company’s third consecutive earnings beat, with an average surprise of 2.5% for the trailing four quarters.
Will Wintrust miss on earnings this quarter? Let’s see how things have shaped up.
Factors to Influence Fourth Quarter Results
During the quarter, Wintrust announced a deal to buy Delavan Bancshares, Inc. – the parent company of Community Bank CBD. Community Bank runs four banking locations spread in the southeastern region of Wisconsin. This deal followed the acquisition of 11 branch offices, related deposits and loans from Talmer Bancorp in the third quarter.
OREO costs, which include all costs related to obtaining, maintaining and selling other real estate owned properties, are expected to trend higher in the fourth quarter. Wintrust targets net overhead ratio below 1.50% through acquisitions and cost savings.
We do not expect any remarkable improvement in Wintrust’s interest income, given the persistent low-rate environment. However, growth in non-interest income may get a boost as the company remains optimistic about its mortgage and wealth management business.
Further, Wintrust remains confident of its net loan growth expectations of $250 million to $300 million for the quarter.
Activities of Wintrust during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 76 cents per share over the last seven days.
Earnings Whispers
Our proven model does not conclusively show that Wintrust is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Wintrust is +3.95%. This is because the Most Accurate estimate of 79 cents is above the Zacks Consensus Estimate of 76 cents.
Zacks Rank: Wintrust’s Zacks Rank #4 (Sell) however, lowers the predictive power of ESP. We caution investors against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The PNC Financial Services Group, Inc. (PNC) has an earnings ESP of +0.57% and carries a Zacks Rank #3. It is scheduled to report results on Jan 16.
BancorpSouth, Inc. (BXS) has an earnings ESP of +3.23% and carries a Zacks Rank #2. It is scheduled to report results on Jan 21.
BOK Financial Corporation (BOKF) has an earnings ESP of +0.94% and a Zacks Rank #3. It is slated to report results on Jan 28.
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