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What to Expect From Newtek Business (NEWT) in Q3 Earnings

Newtek Business Services Corp. NEWT is scheduled to report third-quarter 2019 results on Nov 6, after market close. Its earnings and revenues are expected to have grown year over year.

The company does not have an impressive earnings surprise history. Its earnings missed the Zacks Consensus Estimate in two of the trailing four quarters.

In the last reported quarter, it lagged Zacks Consensus Estimate. Results were affected by rise in expenses, partially offset by higher investment income.

Newtek Business Services Corp. Price and EPS Surprise

Trend in Estimate Revisions

Activities of Newtek in the third quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 57 cents was revised downward over the past 30 days. Nonetheless, it implies significant growth from the year-ago quarter’s reported figure.

The consensus estimate for sales of $13.68 million suggests growth of 10.4%.

Factors at Play

Due to lower interest rates in the third quarter, Newtek’s investment income is likely to have declined. Further, prepayments and refinancing activities are expected to have risen, thereby hurting profitability to some extent.

Also, several concerns, including uncertainty related to the U.S.-China trade war and Brexit, and expectations of global economic slowdown persisted in the third quarter, which might have resulted in lower business spending. Thus, business lending is expected to have witnessed muted growth.

Overall expenses are likely to have remained elevated in the third quarter mainly due to increase in salaries and benefits costs.

Earnings Whispers

According to our quantitative model, chances of Newtek beating the Zacks Consensus Estimate this time around are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher.

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 Newtek is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Ares Capital Corporation’s ARCC shares have rallied 19% year to date. Also, the company’s earnings estimates for the current year have been revised upward over the past 30 days. The stock carries a Zacks Rank of 2 (Buy), at present.

Hercules Capital’s HTGC share price has increased 30% so far this year. Further, the company’s earnings estimates for the ongoing year have moved upward in the past 30 days. The stock carries a Zacks Rank of 2, currently.

Medallion Financial Corp.’s MFIN shares have gained 48.2% year to date. This Zacks Rank #2 company’s earnings estimates for 2019 have moved up in 30 days’ time.

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Ares Capital Corporation (ARCC): Free Stock Analysis Report
Hercules Capital, Inc. (HTGC): Free Stock Analysis Report
Newtek Business Services Corp. (NEWT): Free Stock Analysis Report
Medallion Financial Corp. (MFIN): Free Stock Analysis Report
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