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JPMorgan, Citigroup and Wells Fargo are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – July 15, 2024 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) .
Q2 Earnings Growth Expected to Reach Two-Year High
The market isn’t particularly impressed with what it saw in the quarterly releases from JPMorgan, Citigroup, and Wells Fargo, even though all three beat top- and bottom-line expectations.
Part of the issue appears to be underwhelming guidance and management commentary, reflecting moderating economic activities on the back of elevated interest rates.
The stocks' outperformance entering this reporting cycle also contributed to the market’s tentative initial reaction to these results.
While all three stocks have outperformed the market in this period, Citigroup's outperformance is more a function of market confidence in the company’s restructuring efforts than any near-term profitability outlook.
We see the Q2 results from these three major banks as good enough–not great, but definitely not bad either. There were no major surprises from either of the three banks, with management’s commentary about financial stress at the lower end of the income distribution no longer a new development following results from several consumer-facing companies.
In the core banking business, profitability remains constrained by margin pressures, cyclically soft demand for credit, and some deterioration in credit quality, albeit from a very low level. On the capital markets side, trading revenues remain strong, and the investment banking business has started showing signs of growth but still remains below the strong level of two years ago. There has been talk of ‘green shoots’ concerning deal pipelines, but the catalyst for that is expected to be the coming Fed easing cycle.
Looking at the Q2 earnings season scorecard for the Finance sector, we now have results from 16.4% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +0.2% from the same period last year on +11.5% higher revenues, with 100% EPS and revenue beats percentages at this stage.
Looking at the Finance sector as a whole, total Q2 earnings for the sector are expected to be up +10.8% on +6.6% higher revenues.
Q2 Earnings Season Scorecard
Including the aforementioned reports from JPMorgan, Citi, and Wells Fargo, we now have Q2 results from 27 S&P 500 members. Total earnings for these 27 index members are up +8.8% from the same period last year on +4.4% higher revenues, with 81.5% beating EPS estimates and only 44.4% able to beat revenue estimates.
The Q2 reporting cycle really ramps up this week, with 45 S&P 500 members on deck to report results. This week’s line-up is heavily weighted toward the Finance sector, but we do have several bellwethers from other sectors reporting results, including Johnson & Johnson, UnitedHealth, Netflix, Schlumberger, and others.
This is too small a sample of results to draw any conclusions from, but the comparisons charts below put the earnings and revenue beats percentages for these companies in a historical context.
This is by no means a representative sample of results at this early stage, but we will be keenly looking at how the revenue beats percentage evolves in the days ahead, as we are off to a rough start on that count.
The Earnings Big Picture
Looking at Q2 as a whole, combining the actual results that have come out already with estimates for the still-to-come companies, total S&P 500 earnings are expected to be up +8.5% from the same period last year on +4.7% higher revenues. This will be the highest quarterly growth pace since the +10% earnings growth rate in the 2022 Q1 period.
As we have been flagging all along in this space, we experienced a notably favorable revisions trend ahead of the start of the Q2 earnings season, with estimates for Q2 holding up far better than other recent periods. In the three-month period since the start of the quarter through June 30th, Q2 estimates for the S&P 500 index fell the least relative to the comparable periods of other recent quarters.
Not only is the Q2 earnings growth the highest since the first quarter of 2022, but the absolute level of aggregate earnings for the period is on track to be a new all-time quarterly record.
Looking at earnings expectations on an annual basis, total 2024 S&P 500 earnings are expected to be up +8.9% on +1.6% revenue growth.
The expected revenue growth pace improves to +3.8% once Finance is excluded from the aggregate data, with the index-level aggregate earnings growth for the year remaining unchanged on an ex-Finance basis.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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.
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JPMorgan, Citigroup and Wells Fargo are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – July 15, 2024 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) .
Q2 Earnings Growth Expected to Reach Two-Year High
The market isn’t particularly impressed with what it saw in the quarterly releases from JPMorgan, Citigroup, and Wells Fargo, even though all three beat top- and bottom-line expectations.
Part of the issue appears to be underwhelming guidance and management commentary, reflecting moderating economic activities on the back of elevated interest rates.
The stocks' outperformance entering this reporting cycle also contributed to the market’s tentative initial reaction to these results.
While all three stocks have outperformed the market in this period, Citigroup's outperformance is more a function of market confidence in the company’s restructuring efforts than any near-term profitability outlook.
We see the Q2 results from these three major banks as good enough–not great, but definitely not bad either. There were no major surprises from either of the three banks, with management’s commentary about financial stress at the lower end of the income distribution no longer a new development following results from several consumer-facing companies.
In the core banking business, profitability remains constrained by margin pressures, cyclically soft demand for credit, and some deterioration in credit quality, albeit from a very low level. On the capital markets side, trading revenues remain strong, and the investment banking business has started showing signs of growth but still remains below the strong level of two years ago. There has been talk of ‘green shoots’ concerning deal pipelines, but the catalyst for that is expected to be the coming Fed easing cycle.
Looking at the Q2 earnings season scorecard for the Finance sector, we now have results from 16.4% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +0.2% from the same period last year on +11.5% higher revenues, with 100% EPS and revenue beats percentages at this stage.
Looking at the Finance sector as a whole, total Q2 earnings for the sector are expected to be up +10.8% on +6.6% higher revenues.
Q2 Earnings Season Scorecard
Including the aforementioned reports from JPMorgan, Citi, and Wells Fargo, we now have Q2 results from 27 S&P 500 members. Total earnings for these 27 index members are up +8.8% from the same period last year on +4.4% higher revenues, with 81.5% beating EPS estimates and only 44.4% able to beat revenue estimates.
The Q2 reporting cycle really ramps up this week, with 45 S&P 500 members on deck to report results. This week’s line-up is heavily weighted toward the Finance sector, but we do have several bellwethers from other sectors reporting results, including Johnson & Johnson, UnitedHealth, Netflix, Schlumberger, and others.
This is too small a sample of results to draw any conclusions from, but the comparisons charts below put the earnings and revenue beats percentages for these companies in a historical context.
This is by no means a representative sample of results at this early stage, but we will be keenly looking at how the revenue beats percentage evolves in the days ahead, as we are off to a rough start on that count.
The Earnings Big Picture
Looking at Q2 as a whole, combining the actual results that have come out already with estimates for the still-to-come companies, total S&P 500 earnings are expected to be up +8.5% from the same period last year on +4.7% higher revenues. This will be the highest quarterly growth pace since the +10% earnings growth rate in the 2022 Q1 period.
As we have been flagging all along in this space, we experienced a notably favorable revisions trend ahead of the start of the Q2 earnings season, with estimates for Q2 holding up far better than other recent periods. In the three-month period since the start of the quarter through June 30th, Q2 estimates for the S&P 500 index fell the least relative to the comparable periods of other recent quarters.
Not only is the Q2 earnings growth the highest since the first quarter of 2022, but the absolute level of aggregate earnings for the period is on track to be a new all-time quarterly record.
Looking at earnings expectations on an annual basis, total 2024 S&P 500 earnings are expected to be up +8.9% on +1.6% revenue growth.
The expected revenue growth pace improves to +3.8% once Finance is excluded from the aggregate data, with the index-level aggregate earnings growth for the year remaining unchanged on an ex-Finance basis.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Earnings Season Gets Underway: Bank Earnings in Focus
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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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.