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Summary

  • Earnings expectations are more optimistic than they've been since the 4th quarter of 2011 and the stock market is near all time highs.
  • While most sectors are slated for strong performances, the financials are an exception to the rule.
  • Contributing analysts on the Estimize.com platform are expecting the financials to report weaker earnings compared to FQ2 of last year, but still manage to edge past the deflated estimates set by Wall Street.

Financials Overview:

According to data from S&P Capital IQ, companies in the S&P 500 are expected to increase their earnings by an average of 6.6% this quarter and grow revenue by 4%. The projected earnings growth is well above the 3.4% figure reported last quarter and the rate of revenue expansion is expected to hold steady at 4%. Earnings expectations are more optimistic than they've been since the 4th quarter of 2011 and the stock market is near all time highs. While most sectors are slated for strong performances, the financials are an exception to the rule. Throughout the quarter, analysts have taken down their earnings estimates for the banks across the board. Contributing analysts on the Estimize.com platform are expecting the financials to report weaker earnings compared to FQ2 of last year, but still manage to edge past the deflated estimates set by Wall Street.

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First Up To the Plate: Citigroup (NYSE:C)

The first bank reporting earnings next week will be Citigroup on Monday before the opening bell. Earnings estimates for Citigroup have fallen considerably over the previous 3 months as they have for the other banks as well. The latest analyst revisions have Citigroup reporting $1.20 in EPS, down from $1.25 in the same quarter of last year. At the same time, revenue is expected to come in about 6% lower than the $2.5B reported in FQ of last year. Although a downturn in financial performance is expected, the Estimize community still forecasts that Citigroup will beat the Wall Street earnings consensus by about 3.5%.

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Most Likely to Outperform: Goldman Sachs (NYSE:GS)

Of the four major banks reporting earnings this coming week, contributing analysts on the Estimize.com platform expect Goldman Sachs to outperform the Wall Street consensus by the widest margin. According to Reuters, Goldman Sachs is the top M&A advisor in the world, and was involved in deals worth $623 billion this year alone. A robust mergers and acquisitions environment is likely to provide a boost to Goldman's quarterly earnings.

The Estimize community is forecasting that Goldman Sachs will beat the Street's consensus by 23c (7%) per share on earnings, and $478 million (6%) on revenue. Over the previous 2 years, Goldman Sachs has beaten the Wall Street consensus in each quarter and over the same time horizon, the Estimize consensus has been more accurate than Wall Street 7 times.

While the Estimize community is expecting a big beat from Goldman, contributing analysts are still not anticipating particularly strong financial metrics. The Estimize consensus is looking for a 13% drop in EPS compared to the same quarter of last year and a 1% decline in year over year revenue.

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JPMorgan Chase (NYSE:JPM)

JPMorgan Chase has surprisingly missed the Wall Street consensus on revenue for 3 quarters in a row now and has failed to meet expectations on EPS in the previous 2 quarters. The Estimize consensus for JPMorgan Chase this quarter is telling a similar story to Citigroup and Bank of America. Earnings are expected to come in subdued, but still ahead of the sell side estimates which have been slashed heavily throughout the quarter. The Estimize community is expecting JPMorgan Chase to come in 4c ahead of the Wall Street forecast on earnings per share and $372M (1.5%) on revenues.

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Wrapping up the Week: Bank of America (NYSE:BAC)

Bank of America missed its EPS target sharply last quarter, but did manage to report better than expected revenue. The Estimize community is forecasting that Bank of America will report 32c EPS, in-line with FQ2 results from last year. This makes Bank of America the only financial institution in our preview that is not expected to report declining earnings this quarter. Contributing analysts on the Estimize platform expect BAC to report roughly in-line with the Wall Street consensus, beating the EPS consensus by a penny per share and outperforming the Street's revenue projection by $630M, or roughly 3% on both the top and bottom line.

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Disclosure: None

Source: Earnings Season Preview: What To Expect From The Banks