Are You Ready for These 5 Banks to Report Earnings?
The financial sector recently logged its best performance in almost a decade. Between cutting costs and monetary easing from the Federal Reserve, banks rallied across the board last year. Investors are now looking to earnings to sustain the momentum, but this earnings season could be tepid according to estimates.
Companies and analysts have been been reducing estimates for the fourth quarter since October. For the overall market, earnings growth is expected to come in at 2.8 percent, according to data from Thomson Reuters. Meanwhile, FactSet Research is only forecasting 2.4 percent earnings growth and 2.1 percent revenue growth.
“People’s expectations for fourth-quarter earnings aren’t especially aggressive because of all the fiscal issues that had to be dealt with, and my suspicion is that we’ll have the kind of season we’ve had the last three or four quarters, which saw steady earnings growth,” explained Bill McQuaker from Henderson Global Investors to the WSJ.
Earnings growth expectations for financials have been cut to 8.7 from almost 16 percent since the end of the fourth quarter. This week, some of the biggest names in the industry and S&P 500 will announce earnings. Using data from Bespoke Investment Group, a market research firm, let’s take a look at the firms and their likelihood to beat estimates…
Goldman Sachs (NYSE:GS):
The Lloyd Blankfein led bank reports earnings on Wednesday. On a historic basis, the company has beaten EPS estimates 89 percent of the time, while topping revenue estimates 72 percent of the time. Goldman appears to move very little after reporting earnings. The average one-day change when it announces results is only 0.8 percent to the upside.
JPMorgan Chase (NYSE:JPM):
America’s largest bank by assets reports financial results on Wednesday. JPMorgan surprised investors last year with the London Whale encounter, but the firm has beaten EPS estimates 82 percent of the time, while exceeding revenue estimates 60 percent of the time. The average one-day change when it announces results is relatively low at 0.29 percent higher.
U.S. Bancorp (NYSE:USB):
The Minneapolis-based bank also reports financial results on Wednesday. On a historic basis, the company has beaten EPS estimates 58 percent of the time, while topping revenue estimates 68 percent of the time. The average one-day change when it announces results is almost 1.0 percent higher, making it one of the largest movers in the financial industry.
Bank of America (NYSE:BAC):
The firm reports earnings on Thursday. Bank of America has beaten EPS estimates 71 percent of the time, while exceeding revenue estimates 50 percent of the time. The average one-day change when it announces results is 1.6 percent to the downside.
Shares of Citigroup have been one of the worst performers since the beginning of the financial crisis, but the company still manages to beat EPS estimates 71 percent of the time, while topping revenue estimates 48 percent of the time. The average one-day change when it announces results is 0.44 percent to the downside. Citigroup reports on Thursday.
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