Will TCF Financial (TCB) Miss Q2 Earnings Estimates? - Analyst Blog

TCF Financial Corporation (TCB) is scheduled to report its second-quarter 2014 results on Jul 25.

TCF Financial's first-quarter 2014 earnings of 24 cents per share beat the Zacks Consensus Estimate. The figure also reflected a 50% year-over-year rise. Notably, results for the quarter included an amortization charge. Results reflected top-line growth and lower provision for credit losses. However, increase in non-interest expenses was on the downside.

Will TCF Financial miss earnings estimates this season? Let's see how things have shaped up for this announcement.

Factors to Influence Q2 Results

TCF Financial has been facing challenges in controlling its non-interest expenses that have been escalating over the past few years as well as in first-quarter 2014. Though the company is focused on achieving optimized expenses through several initiatives including asset growth in lending business, branch consolidation and reduced foreclosed real estate and other credit costs, we are not confident about the extent of reflection of these factors in the second quarter.

TCF Financial's card revenues form a significant component of total banking fee revenues. We observed that due to a decrease in the average interchange rate per transaction owing to new debit card interchange regulations, which took effect on Oct 2011, card revenues have been consistently declining since 2011. We expect continuation of such a trend to limit the company's revenue expansion.

However, the company's financials might get some support owing to an asset sensitive balance sheet and continuous benefit from balance sheet streamlining. Also, given the rise in home values in major markets and the ongoing recovery of the economic scenario, the company's credit quality is expected to exhibit improvement in this quarter as well.

Activities of TCF Financial during the quarter were inadequate to win analysts' confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 27 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that TCF Financial is likely to beat the Zacks Consensus Estimate in the upcoming release. 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 TCF Financial is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 27 cents per share.

Zacks Rank: TCF Financial's Zacks Rank #3 increases the predictive power of ESP.  However, we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks That Warrant a Look

Here are some stocks in the finance sector you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Affiliated Managers Group Inc. (AMG) has an earnings ESP of +1.16% and carries a Zacks Rank #2. It is scheduled to report its second-quarter results on Jul 29.

The Carlyle Group LP (CG) has an earnings ESP of +4.55% and holds a Zacks Rank #3. It is expected to report its results for the quarter ended June 2014 on Jul 30.

Fortress Investment Group LLC (FIG) has an earnings ESP of +17.65% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 31.