Can Fifth Third Bancorp Make it Four in a Row? (FITB)

Like a five-year-old days before Christmas, nothing fills traders with more anticipation than a company’s upcoming quarterly financial reports. The schedule on Thursday, October 18, calls for Fifth Third Bancorp (FITB) to release its third-quarter results. The consensus view of analysts covering the stock projects earnings to come in a penny light from the same period last year, when Fifth Third earned $0.40 per share, and revenues are expected to top $1.5 billion. Earning’s estimates, however, have increased by 3 cents since the release of second-quarter results. Analysts covering the company expect the bank to show full-year earnings of $1.61 per share on revenues of $6.33 billion. Fifth Third has beaten analyst expectations for three quarters in a row.

Of course, anticipation does not necessarily mean expecting the positive. Share prices opened on a good note this morning when the first trade of the day executed at a dime more than yesterday’s closing price. Shortly after the opening trade, the stock moved a penny higher to a daily high of $15.48. Sellers then started dumping shares quicker than a fruitcake. Shares of Fifth Third Bank came under a steady stream of selling pressure throughout the day. When the afternoon bell rang, the stock sat at $15.00, or just two cents above the low for the day. The final tally for the trading session showed the stock with a loss of over 2% to close down 33 cents at $15.00. Over 19 million shares traded hands compared to an average volume of 11.02 million shares. Investors will be crossing their fingers for a good earnings report while traders try to figure out if the stock closing down near its low on heavy volume is a harbinger of things to come.

Since Bank of America (NYSE: BAC) downgraded the stock from a “buy” to a “neutral” rating last week, the stock has fallen over 6%. The reason for the downgrade was a valuation call. The analyst for Bank of America also believes big money center banks may benefit more from a housing recovery than large regionals like Fifth Third Bancorp. A majority of analysts rate the stock as “hold” or “neutral” with an average price target of $16.82.

Over the last 12 months, Fifth Third share prices have stair-stepped higher from an annual low of $10.61 set last October. The stock hit a fresh 52-week high earlier this month when shares traded for $16.16. The stock has gained 25% from the beginning of June through today’s closing price.

Other possible news affecting the way traders feel about the stock of Fifth Third was the story on October 11 concerning the resignation of Chief Investment Officer Keith Wirtz. He had served 10 years in the role.

Fifth Third Bancorp is a financial services company serving the needs of businesses and individuals. The bank has four operating segments that include commercial banking, consumer lending, branch banking and investment advisory. At the end of 2011, the bank had $117 billion in assets.

The bank pays a dividend of $0.10 per share, which gives the stock an effective yield of 2.67% at current prices.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).