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Toronto-Dominion (TD) to Post Q2 Earnings: What's in Store?

The Toronto-Dominion Bank TD is slated to announce second-quarter fiscal 2020 (ended Apr 30) results on May 28, before the opening bell. Its earnings and revenues are expected to decline year over year.

Rise in expenses and higher provisions adversely impacted the company’s results in the last reported quarter. However, increased revenues and growth in loan and deposit balances were tailwinds.

The Zacks Consensus Estimate for earnings of 59 cents per share has been downwardly revised by 46.4% over the past 30 days, reflecting analysts’ bearish sentiments. Also, the figure indicates a 55% decline from the prior-year reported number. The consensus estimate for sales for the to-be-reported quarter is pegged at $7.53 billion, suggesting fall of 1.9% from the year-ago quarter.

Toronto Dominion Bank The Price

Toronto Dominion Bank The Price
Toronto Dominion Bank The Price

Toronto Dominion Bank The price | Toronto Dominion Bank The Quote

efore we take a look at what our quantitative model predicts for the quarter to be reported, let’s take a look at the factors that are expected to have influenced Toronto-Dominion’s performance.

Factors to Note

Higher Provisions: Given coronavirus-led economic slowdown and steady fall in oil prices, Toronto-Dominion is likely to have recorded a drastic rise in provision for credit losses (PCL) in second-quarter fiscal 2020.

Earlier this month, the bank projected PCL of C$1.1 billion ($0.8 million) and C$0.6 billion ($0.4 billion) for the U.S. retail banking and Corporate segments, respectively, for the to-be-reported quarter  The Corporate segment’s PCL comprises mainly the retailer partners’ share of PCL for the bank's U.S. strategic card portfolio.

Muted Growth in Investment Banking Fees: With overall business activities getting hampered due to the coronavirus outbreak, the number of announced M&As have declined in second-quarter fiscal 2020. As global M&A activity remained weak during the quarter, Toronto-Dominion’s advisory fees are likely to have been negatively impacted.

Overall weak equity market performance resulted in a decline in follow-up equity issuances. Owing to unexpected rise in market volatility during the quarter, investors have started moving toward safe havens like Treasury bonds. Hence, bond issuance volumes have been strong but debt issuances have been muted owing to soft loan demand. Hence, growth in Toronto-Dominion’s underwriting fees is likely to have been decent in the fiscal second quarter.

Slight Improvement in Trading Revenues: Amid the virus outbreak, equity markets witnessed a significant rise in volatility. Given such a volatile market performance, investors are moving toward safe havens like Treasury bonds and other commodities like gold. Hence, Toronto-Dominion’s equity and fixed income market revenues are expected to have improved in the to-be-reported quarter.

Weak Net Interest Income (NII) Growth: A low interest rate environment is likely to have hampered interest income growth. Also, the virus outbreak in March resulted in a drop in loan demand, as business and consumer activities came to a grinding halt. Therefore, growth in NII in the second quarter of fiscal 2020 is expected to have been soft.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Toronto-Dominion this time around. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better increases 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 0.00%.

Zacks Rank: It currently has a Zacks Rank #3.

Stocks Worth a Look

Tradeweb Markets Inc.’s TW earnings estimates for the current year have moved nearly 1% north in 30 days’ time. Further, the company’s shares have rallied 46% over the past year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings estimates for 2020 for West Bancorporation WTBA have been unchanged over the past 30 days. This Zacks #1 Ranked stock has lost 18.2% over the past 12 months.

Eagle Bancorp Montana, Inc. EBMT has witnessed 7.5% upward earnings estimate revision for 2020 in the past 30 days. This Zacks #2 (Buy) Ranked stock has gained 5.5% over the past year.

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