2013 is here, and earnings season has already started ramping up. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction that turns out to be exactly the wrong move to the news.
Let's turn to BB&T (BBT +1.58%). The Southern-based bank had an up-and-down quarter last fall as it tried to deal with an ever-changing banking environment, but BB&T is still poised to finish a highly constructive year from an earnings perspective. Let's take an early look at what's been happening with BB&T over the past quarter and what we're likely to see in its quarterly report Thursday morning.
Stats on BB&T
|
Analyst EPS Estimate |
$0.71 |
|
Change From Year-Ago EPS |
29% |
|
Revenue Estimate |
$2.46 billion |
|
Change From Year-Ago Revenue |
1.9% |
|
Earnings Beats in Past 4 Quarters |
3 |
Source: Yahoo! Finance.
Can you bank on BB&T's earnings?
Analysts have remained fairly stable in their opinion that BB&T will post solid improvement in the fourth quarter. Yet with a big earnings miss last quarter, the stock has dropped about 6% in the past three months.
One of the biggest problems that BB&T faced during the quarter was the presidential election. With the bank serving solid Republican territory in the South, investors pushed shares down more than 5% the day after the election on fears that increased banking regulation could hit BB&T especially hard.
But BB&T will also have to deal with immense competition. With its home territory having some of the fastest economic growth in the country, BB&T is facing incursions from PNC Financial (PNC +0.57%) and Toronto-Dominion (TD +1.49%), all of which are looking for opportunities to expand in the key Florida banking market through a possible acquisition of City National Bank of Florida. Still, BB&T isn't standing still, as it announced in November that it plans to expand in Texas, focusing on small and commercial business lending.
Moreover, the Federal Reserve's interest rate policies could hit BB&T especially hard. Along with Fifth Third (FITB +0.82%) and Zions Bancorp (ZION +1.11%), BB&T could see some of the biggest drops in net interest margins in the industry. With earnings so hard to come by, margins are more important than ever for banks.
BB&T needs to tap into the economic potential of its region to boost growth. If it can show signs of doing so in the fourth quarter, then BB&T has room to rise from current levels.
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