3 stocks to watch before the earnings season

Earnings season is upon us again, and while long-term investors shouldn’t place too much weight on a company’s results in a single quarter, these regular checks can certainly give investors more weight. clarity on the performance of companies and the economy at large. . Quarterly reports can also provide information on a company’s growth trajectory.

This earnings season I’ll be keeping a close eye on a few interesting stocks, including Capital of Silvergate (NYSE: SI), Live Oak Bancshares (NASDAQ: LOB), and Hen head insurance (NASDAQ: GSHD).

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1. Silvergate Capital

Silvergate Capital started out as a traditional bank, but in 2013 it turned to digital currency clients, offering paid solutions for people trying to navigate the underdeveloped regulatory environment around cryptocurrencies. This stimulated the growth of the bank, as Bitcoin and other tokens have appreciated in value.

Silvergate has increased its total deposits at an astounding rate. At the end of the second quarter, deposits totaled $ 11.4 billion, up 117% from the end of 2020. However, one aspect that interests me is the growth of its Silvergate Exchange Network (SEN). In the first six months of this year, the bank facilitated $ 406 billion in transfers through this network, compared to just $ 40 billion in transfers in the first half of 2020.

Digging deeper, I’m interested in the growth of Silvergate’s SEN Leverage product, which he launched in January. This allows institutional investors to enter into loan agreements with Silvergate for US dollar funding using Bitcoin as collateral. At the end of the second quarter, Silvergate had a total SEN leveraged loan balance of $ 203.4 million, up from $ 117.3 million at the end of the first quarter and $ 77.2 million at the end. from 2020.

On average, analysts expect third-quarter revenue of $ 48.25 million, which would represent 111% year-over-year growth, and EPS of $ 0.71, which would be up 92% compared to the previous year period.

Silvergate is expected to report before the market opens on October 19.

The insurance agent meets with a couple to discuss options.

Image source: Getty Images.

2. Live Oak Bancshares

Live Oak Bancshares is the nation’s largest small business lender, according to the Small Business Administration’s 7 (a) loan program, with 1,552 loans approved totaling $ 2.3 billion through September 30. His next closest rival was Huntington National Bank, with loans totaling $ 927 million.

According to the SBA, small businesses make up 99.9% of businesses in the United States and employ 47.1% of workers. Live Oak’s performance this quarter could give us some insight into the health of small business lending, which could provide a glimpse of the strength of the economic recovery.

One metric I will be watching is Live Oak’s loan and lease generation. Loan growth could be indicative of future spending for small businesses, and it’s also critical to Live Oak’s strategy to grow recurring revenue. In the first half of this year, fixtures totaled nearly $ 1.8 billion, and during the second quarter earnings call, CEO James Mahan predicted fixtures for the entire year would be included. between $ 3.3 billion and $ 3.5 billion.

Analysts’ average expectation for Live Oak’s third-quarter revenue is $ 98.6 million, which would represent a 0.2% growth from a year ago. The average earnings per share (EPS) estimate is $ 0.65, which would be nearly 20% down from last year. While growth in the third quarter may be slow, the fourth quarter is expected to be better – analysts expect revenue growth of 33.8%.

Live Oak is expected to release its results after the market closes on October 27.

3. Hen’s head insurance

Insurance broker Goosehead sells policies through its corporate network and a growing franchise network.

One aspect of the business that I love is this franchise channel, and I’m curious to see what kind of growth the insurer will see from here. At the end of 2018, Goosehead had 457 franchises in operation, and as of June 30, that number had grown at a compound annual rate of 40.7% to 1,072. Not only that, but it has 1,801 franchisees in total, which shows that there is still room for growth once these franchisees are operational.

During the last quarter’s earnings call, CEO Mark Jones said, “Due to our rapid growth rates, 63% of our total franchise base are in their first year or preparing to embark. While this cohort offers minimal bonuses and earnings today, their predictable launch and production ramp, combined with our increasing retention rates, are expected to fuel powerful growth over the next decade and beyond. “

The average analyst estimate for the insurance broker’s third-quarter revenue is around $ 40 million, which would equate to a 25.2% growth from a year ago. EPS is expected to drop 26% to $ 0.17. This would be in line with the trend seen so far this year, which has seen strong revenue growth even as the bottom line has lagged due to the costs the company has incurred to rapidly develop its franchise channel.

Goosehead has yet to announce a date for its third quarter report.

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Courtney Carlsen owns shares of Bitcoin. The Motley Fool owns stock and recommends Bitcoin, Goosehead Insurance, Inc., and Live Oak Bancshares. The Motley Fool has a disclosure policy.

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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