First Financial Northwest (FFNW) earnings are expected to decline

First Financial Northwest (FFNW) is expected to report a year-over-year profit decline on higher revenues in its report for the quarter ended March 2023. This widely known consensus outlook paints a good picture of the company’s earnings, but comparing actual results to these estimates is an important factor that can impact the near-term share price.

Shares could rise if these key numbers beat expectations in the upcoming earnings report. On the other hand, if they miss, the stock could fall.

While management’s discussion of business conditions during the earnings call will largely determine the durability of the immediate price change and future earnings expectations, it is worth having partial insight into the likelihood of a positive EPS surprise.

Zacks Consensus Estimate

The bank is expected to post quarterly earnings per share of $0.30 per share in its upcoming report, representing a year-over-year change of -16.7%.

Revenue is expected to be $12.65 million, up 4% from the year-ago quarter.

Estimate the trend of change

The consensus EPS estimate for the quarter has not changed over the last 30 days. This broadly reflects how analysts covering the data have collectively re-evaluated their initial estimates during this period.

Investors should note that the aggregate change does not necessarily reflect the direction of estimate revisions by each major analyst.

Whisper about earnings

Revisions to estimates prior to a company’s earnings release provide an indication of business conditions in the period in which the earnings are expected to be released. Our proprietary surprise prediction model, the Zacks Earnings ESP, is based on this insight.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is a newer revision of the Zacks Consensus EPS estimate. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Thus, a positive or negative ESP reading theoretically indicates the likely deviation of actual earnings from consensus estimates. However, the predictive power of the model is only significant for positive ESP readings.

A positive Earnings ESP is a strong predictor of an earnings beat, especially when paired with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks in this combination deliver a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of its Earnings ESP.

Please note that a negative ESP reading does not mean a loss of profits. Our research shows that it is difficult to predict earnings growth with any degree of confidence for stocks with negative ESP readings and/or a Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How have the numbers changed for First Financial?

For First Financial, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company’s earnings prospects. This resulted in an earnings ESP of -2.25%.

On the other hand, the stock currently sports a Zacks Rank of #4.

So this combination makes it difficult to confidently predict that First Financial will beat the consensus EPS estimate.

Does the history of surprising results have any clue?

When calculating estimates of a company’s future earnings, analysts often consider how well the company has been able to match previous estimates. So it’s worth taking a look at the surprise history to gauge its impact on the upcoming issue.

First Financial was expected to post earnings of $0.38 per share for the last reported quarter when it actually produced earnings of $0.35, delivering a surprise of -7.89%.

The company has beaten consensus EPS estimates three times over the last four quarters.

Bottom line

Improving or lacking earnings may not be the only basis for a stock’s value rising or falling. Many stocks lose value despite good earnings because of other factors that disappoint investors. Similarly, unforeseen catalysts help many stocks gain despite losing profits.

That said, betting on stocks that are expected to exceed earnings expectations increases your chances of success. Therefore, it is worth checking the company’s Earnings Rank and Zacks Rank before their quarterly release. Use our Earnings ESP filter to find the best stocks to buy or sell before they report.

First Financial doesn’t seem like a compelling earnings beat candidate. However, investors should also pay attention to other factors if they want to bet on or stay away from these stocks ahead of an earnings release.

Expected results of an industry player

Columbia Banking (COLB) from the Zacks Banks – West industry is soon expected to post earnings per share of $0.40 for the quarter ending March 2023. These estimates indicate a year-over-year change of -50.6%. Revenue for the quarter is expected to be $424.88 million, an increase of 149.4% compared to the same quarter last year.

The consensus EPS estimate for Columbia Banking has been revised 3.3% upwards to the current level over the last 30 days. However, the higher most accurate estimate resulted in an earnings ESP of 13.90%.

This Earnings ESP combined with the Zacks Rank #3 (Hold) suggests that Columbia Banking is likely to outperform the consensus EPS estimate. The company has beaten consensus EPS estimates in each of the four consecutive quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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First Financial Northwest, Inc. (FFNW): Free stock analysis report

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