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Zacks Earnings Trends Highlights: Citigroup, JPMorgan and Bank of America
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For Immediate Release
Chicago, IL – January 18, 2024 – Zacks Director of Research Sheraz Mian says, "For the Technology sector, total Q4 earnings are expected to be up +18.7% from the same period last year on +6.6% higher revenues."
Q4 Earnings Season Kicks Off Positively
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
We are off to a good start in the Q4 earnings season, with an above-average proportion of companies beating EPS estimates. On the flip side, companies appear to be struggling to beat revenue estimates.
Total Q4 earnings for the 36 S&P 500 members that have reported results are up +4.2% from the same period last year on +5.4% higher revenues, with 86.1% beating EPS estimates and 55.6% beating revenue estimates.
The revenue growth pace for this group of index members represents a deceleration relative to what we had seen from the group in other recent periods, while the 55.6% revenue beats percentage is a new 20-quarter low for this group of 36 index members.
For the Technology sector, total Q4 earnings are expected to be up +18.7% from the same period last year on +6.6% higher revenues. Had it not been for the strong Tech sector contribution, Q4 earnings for the remainder of the index would be down -6.4% (instead of up +0.2% as a whole).
While Citigroup (C - Free Report) beat both EPS and revenue estimates, JPMorgan (JPM - Free Report) and Bank of America (BAC - Free Report) followed the emerging trend at this early stage in the Q4 reporting cycle of easily beating EPS estimates but coming up short concerning top-line estimates.
It may be premature to draw any firm conclusions from the 36 S&P 500 members, or a little over 7% of the index’s total membership, that have reported December-quarter results at this stage. But the disparity between earnings and revenue performance is fairly pronounced, at least at this stage.
As noted earlier, we are off to a good start, with an above-average proportion of these companies beating EPS estimates. In fact, the 86.1% EPS beats percentage is notably above the 20-quarter average for this group of 36 index members of 80.6%. The earnings growth pace for this group of companies is also comparable to what we had seen from this group of companies in other recent quarters.
The Q4 performance picture isn’t that reassuring on the revenues side, with the growth pace for these 36 index members showing a decelerating trend and the revenue beats percentage the lowest in the preceding 20-quarter period.
We have noted some degree of revenue weakness in the preceding reporting cycle as well, though the magnitude of revenue underperformance this time around appears more pronounced. That’s assuming the current trend is for real and not reflective of an unrepresentative sample.
Perhaps disinflation is at work in producing this revenue trend.
Beyond the results that have come out, total Q4 earnings are currently expected to be +0.2% above the year-earlier period on +2.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.0% higher revenues.
The growth picture is expected to steadily improve over the next few quarters.
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. Some of that downward adjustment is already happening.
As we have noted before, full-year 2024 estimates started coming down in October, with the trend continuing in November and early December, but appear to have stabilized in recent weeks.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Citigroup, JPMorgan and Bank of America
For Immediate Release
Chicago, IL – January 18, 2024 – Zacks Director of Research Sheraz Mian says, "For the Technology sector, total Q4 earnings are expected to be up +18.7% from the same period last year on +6.6% higher revenues."
Q4 Earnings Season Kicks Off Positively
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
While Citigroup (C - Free Report) beat both EPS and revenue estimates, JPMorgan (JPM - Free Report) and Bank of America (BAC - Free Report) followed the emerging trend at this early stage in the Q4 reporting cycle of easily beating EPS estimates but coming up short concerning top-line estimates.
It may be premature to draw any firm conclusions from the 36 S&P 500 members, or a little over 7% of the index’s total membership, that have reported December-quarter results at this stage. But the disparity between earnings and revenue performance is fairly pronounced, at least at this stage.
As noted earlier, we are off to a good start, with an above-average proportion of these companies beating EPS estimates. In fact, the 86.1% EPS beats percentage is notably above the 20-quarter average for this group of 36 index members of 80.6%. The earnings growth pace for this group of companies is also comparable to what we had seen from this group of companies in other recent quarters.
The Q4 performance picture isn’t that reassuring on the revenues side, with the growth pace for these 36 index members showing a decelerating trend and the revenue beats percentage the lowest in the preceding 20-quarter period.
We have noted some degree of revenue weakness in the preceding reporting cycle as well, though the magnitude of revenue underperformance this time around appears more pronounced. That’s assuming the current trend is for real and not reflective of an unrepresentative sample.
Perhaps disinflation is at work in producing this revenue trend.
Beyond the results that have come out, total Q4 earnings are currently expected to be +0.2% above the year-earlier period on +2.2% higher revenues. This would follow the +3.8% increase in index earnings in 2023 Q3 on +2.0% higher revenues.
The growth picture is expected to steadily improve over the next few quarters.
Given the expected moderation in the U.S. economy’s growth trajectory due to the cumulative effects of Fed tightening, these estimates likely need to come down. Some of that downward adjustment is already happening.
As we have noted before, full-year 2024 estimates started coming down in October, with the trend continuing in November and early December, but appear to have stabilized in recent weeks.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.