Bank of Hawaii's Upcoming Earnings Report and the Odds of a Positive Surprise

The financial markets are a theater of expectations, and no performance is more anticipated than quarterly earnings reports. For Bank of Hawaii (BOH), the spotlight turns to July 28, 2025, when the regional bank will reveal whether it can deliver a positive surprise to investors. The stakes are high, not just for the company but for those parsing the strategic implications of two critical tools: the Earnings ESP (Expected Surprise Prediction) and the Zacks Rank. These indicators, when analyzed together, offer a nuanced lens through which to assess the odds of an earnings beat and the broader investment thesis.

The Earnings ESP: A Glimpse of Optimism

Bank of Hawaii's Earnings ESP for the June 2025 quarter stands at +0.96%, a figure derived from the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. This positive reading suggests that analysts have recently revised their forecasts upward, signaling growing confidence in the company's ability to exceed expectations. The consensus estimate of $1.04 per share implies a 20.9% year-over-year increase, a significant leap driven by robust net interest income and a 7.7% revenue growth to $169.08 million.

However, the Earnings ESP is not a standalone oracle. While it historically correlates with earnings surprises—particularly when paired with a favorable Zacks Rank—its predictive power is tempered by broader market dynamics. For example, the recent bearish sentiment in the March 2025 quarter (Earnings ESP of -2.83%) and December 2024 (ESP of -6.36%) underscores the volatility in analyst sentiment. This history complicates the current optimism, as investors must weigh whether the recent upward revisions are sustainable or merely a reaction to short-term tailwinds.

The Zacks Rank: A Strong Buy Signal

The most compelling development for BOH is its recent upgrade to a Zacks Rank #1 (Strong Buy). This ranking, reserved for the top 5% of Zacks-covered stocks, is based on the trajectory of earnings estimate revisions. Over the past three months, the Zacks Consensus Estimate for BOH has surged by 12.3%, reflecting a consensus among analysts that the company's fundamentals are improving. This upgrade is underpinned by several factors:
- Strong Capital Position: Tier 1 and total capital ratios of 13.93% and 14.97% as of March 31, 2025, respectively, provide a buffer against economic headwinds.
- Earnings Momentum: The company has exceeded estimates in three of the past four quarters, with an average surprise of 5.67%.
- Projected Growth: A three-to-five-year EPS growth rate of 22.4%, well above the industry average of 7.3%, suggests a durable earnings trajectory.

The Zacks Rank #1 designation is not merely a label; it is a signal that BOH is poised to outperform in the near term. Historically, stocks with a Zacks Rank #1 have delivered superior returns within 30 to 60 days of the rating's assignment, as the market incorporates the positive revisions.

Strategic Implications for Short-Term Investors

The interplay between the Earnings ESP and Zacks Rank creates a compelling case for a positive surprise. A Zacks Rank #1 typically amplifies the predictive power of a positive Earnings ESP, as it indicates that the upward revisions are not isolated but part of a broader trend. For BOH, this combination suggests that the $1.04 per share target is achievable—and perhaps exceeded.

Historical data from past similar events also supports this thesis. When BOH has beaten earnings expectations, the stock has historically delivered strong returns in the short and medium term. From 2022 to the present, the stock has a 3-day win rate of 42.86%, a 10-day win rate of 57.14%, and a 30-day win rate of 42.86% following earnings beats. The maximum observed return during this period was 4.24% on day 18 after a positive surprise. These figures underscore the potential for a post-earnings rally, particularly if the July 28 report exceeds expectations.

Investment Advice: A Calculated Bet

For short-term investors, the current alignment of metrics presents a rare opportunity. The Zacks Rank #1 and positive Earnings ESP suggest that BOH is a high-probability candidate for an earnings beat, with the potential for a post-earnings rally. However, the upgrade to Strong Buy should be contextualized within the company's broader strategic positioning.

• Buy for Momentum: Investors seeking capital appreciation may want to position themselves ahead of the July 28 report, particularly if the stock trades at a discount to its intrinsic value.
• Hedge for Volatility: Given the market's sensitivity to interest rates and economic data, a hedging strategy—such as purchasing put options—could mitigate downside risk if macro conditions deteriorate.
• Monitor Guidance: The company's forward-looking comments during the earnings call will be critical. If management signals confidence in future quarters, the Zacks Rank could be further upgraded, extending the window of opportunity.

Conclusion

Bank of Hawaii's upcoming earnings report is more than a routine update; it is a litmus test for the bank's strategic resilience in a challenging economic landscape. The Earnings ESP and Zacks Rank, when viewed together, suggest a favorable outcome for investors willing to act decisively. While no prediction is infallible, the data points to a scenario where BOH not only meets but exceeds expectations, rewarding those who have done their homework. As always, the key to successful investing lies in balancing optimism with prudence—a lesson as relevant today as it was in the early days of Wall Street.
"""