Friday, December 9, 2022

Is A Beat In Store For Toronto Dominion (TD) In Q1 Earnings?


The Toronto Dominion Bank (TO:) is slated to announce first-quarter fiscal 2019 (ended Jan 31) results on Feb 28, before the opening bell. While its earnings are expected to grow year over year, revenues might decline.

Notably, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 4.9%.

In the last reported quarter, the company witnessed an upsurge in revenues, partially offset by rise in non-interest expenses and provisions for credit losses.

Notably, the Zacks Consensus Estimate for earnings of $1.31 for the fiscal first quarter shows a 6.5% increase on a year-over-year basis. However, the consensus estimate for sales is $7.35 billion, reflecting nearly 1% decline.

To know whether the Canada-based lender will be able to keep its earnings beat streak alive in the to-be-reported quarter as well, let’s take a look at what our quantitative model predicts:

Our proven model shows that Toronto Dominion has the right combination of the 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.

Earnings ESP: The Earnings ESP for Toronto Dominion is +0.57%.

Zacks Rank:The company currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Factors to Drive Results

Interest income Likely to Increase: Rise in loan demand and rising interest rates in Canada and the United States will help the company to register growth in net interest income.

Muted Non-interest income Growth: Modest improvement in equity trading activities in the recent months will likely support its non-interest income. U.S.-China trade war worries, Brexit-related uncertainty and fears of global economic slowdown spiked volatility in the markets and kept the equity trading high.

Also, as customer spending remained decent during the quarter, the company is likely to record higher credit and debit cards fees.

However, rise in interest rates is likely to have lowered companies’ involvement in debt issuance activities. Thus, underwriting fees are not expected to increase much. Also, decline in global M&A deals in the quarter will likely hurt the company’s advisory fees marginally.

Costs Might Rise: Toronto Dominion has been witnessing rise in operating expenses over the past several quarters. The same trend will likely persist in the to-be-reported quarter as the company continues to invest in technology upgrades and grow its workforce.

Earnings Schedule of Other Foreign Banks

National Bank of Canada (OTC:) is scheduled to report results on Feb 27 while Canadian Imperial Bank of Commerce (TO:) will report on Feb 28. Shinhan Financial Group Co Ltd (NYSE:) will release results on Mar 6.

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Shinhan Financial Group Co Ltd (SHG): Free Stock Analysis Report

Canadian Imperial Bank of Commerce (CM): Free Stock Analysis Report

National Bank of Canada (NTIOF): Free Stock Analysis Report

Toronto Dominion Bank (The) (TD): Free Stock Analysis Report

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