First Internet Bancorp (INBK) exited with quarterly earnings of $0.68 per share, missing Zacks consensus estimate of $0.73 per share. That compares to earnings of $1.25 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of -6.85%. A quarter ago, this internet bank was expected to post a profit of $1.15 per share when it actually produced a profit of $0.89, delivering a surprise of -22.61% .

In the past four quarters, the company has exceeded consensus EPS estimates only once.

First Internet, which is part of the Zacks Banks – Northeast industry, posted revenue of $27.48 million for the quarter ended December 2022, beating Zacks’ consensus estimate by 2.91%. That compares to revenues of $31.2 million a year ago. The company has exceeded consensus revenue estimates twice in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

First Internet shares are up about 4% year-to-date compared to the S&P 500’s 4.6% gain.

What’s next for First Internet?

While First Internet has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but one reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this publication of results, the trend of revisions to estimates for First Internet: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 3 (hold) ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.48 on $24.9 million in revenue for the upcoming quarter and $2.24 on $110.25 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Banks – Northeast is currently in the bottom 33% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in the same sector, Lakeland Bancorp (LBAI), has not yet released its results for the quarter ended December 2022. The results are expected to be released on January 26.

This bank holding company is expected to post quarterly earnings of $0.51 per share in its next report, representing a year-over-year change of +18.6%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Lakeland Bancorp’s revenue is expected to be $90.1 million, up 38.9% from the year-ago quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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