Credit Suisse Previews Specialty Finance Companies On Deck To Report Earnings

Specialty finance companies are on deck to release their respective earnings reports. Here's a summary of what investors can expect and should look out for, according to Credit Suisse.

The Analyst

Credit Suisse's Moshe Orenbuch previewed the specialty finance sector.

What To Expect From Credit Cards

• Reserve build will likely be the most important earnings driver for credit card names, Orenbuch said. 
• A recent pickup in cash back rewards warrants attention for American Express Company AXP, he said. 
• Credit Suisse upgraded Capital One Financial Corp COF from Neutral to Outperform with a price target lifted from $110 to $120.

Related Link: Nearly Half Of People Say They Were Never Taught About Credit Cards

What To Expect From Networks

• Investors should pay attention to commentary from Europe.
• Investors should also look out for commentary on what impact is expected from potential trade wars.

What To Expect From Auto Financing

• Santander Consumer USA Holdings Inc SC could comment on its relationship with Chrysler given the car company's option to acquire a public minority interest.
• Ally Financial Inc ALLY could also be impacted, as it comprised 25 percent of Chrysler's loan origination in the first quarter of 2017.

What To Expect From Student Debt

• SLM Corp SLM investors should focus on expense control and ordinations — and a mid-teens reading would be positive.
• Navient Corp NAVI investors should focus on capital allocation and expense management.

What To Expect From Aircraft Lessors

• Macro concerns remain a question mark, including impact on rising rates, higher oil prices and the strength of the U.S. dollar.

What To Expect From American Express

• American Express (July 18) is expected to earn $1.77 per share on revenue of $10.15 billion.
• Cardmember loans should rise 13 percent from a year ago to $75 billion.
• Expenses should total $7.3 billion, including $1.6 billion in marketing and business development expenses and $2.5 billion in card rewards.
• Comments on deposit pricing, net interest margin and AmEx's China strategy will be "interesting."

What To Expect From Capital One

• Capital One (July 19) is expected to earn $2.84 per share on revenue of $6.909 billion.
• The company should show $100 billion in outstanding domestic card loans (up 8 percent year-over-year) and $87 billion in domestic purchase volume (up 15 percent).
• Card loss rate should improve by 52 basis points to 4.74 percent with $1.2 billion in losses.
• Management should discuss its card reserve build trajectory, the benefits of tax reform and growing competition in reward cards.

What To Expect From Discovery

• Discover Financial Services DFS (estimated July 25) is expected to earn $1.91 per share on revenue of $2.642 billion.
• The company should show total loan growth of 9 percent, and 10-percent card loan growth, which is at the high end of management's prior loan growth guidance.
• $455 million in rewards costs would represent a high but steady level, although not as intense as prior years.

What To Expect From Mastercard

• Mastercard Inc MA (July 26) is expected to earn $1.54 per share on revenue of $3.599 billion.
• International purchase growth should continue outpacing U.S. growth.
• Foreign exchange should provide a "decent tailwind" to earnings.
• Management may offer commentary on initiatives to monetize fast ACH and the results of recent requests for proposals.

What To Expect From Synchrony Financial

• Synchrony Financial SYF (estimated July 20) is expected to earn 78 cents per share on revenue of $4.2 billion.
• NIM should move lower from the prior quarter to 15.6 percent due to the impact of prefunding for the Paypal portfolio acquisition.
• Investors should be most focused on any update from potential major contract renewals.
• Investors should also pay attention to comments on deposit pricing competition.

What To Expect From Visa

• Visa Inc V (July 25) is expected to earn $1.09 per share on revenue of $6.56 billion.
• Foreign exchange should provide a "decent tailwind" to earnings.
• Visa's slower growth rate versus Mastercard should converge in 2019 as Europe should show faster growth.
• Investors should look out for commentary on China, its single check-out button, progress of PSD II and recent pricing cut in India, among others.