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Zacks Earnings Trends Highlights: JPMorgan and Bank of America
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For Immediate Release
Chicago, IL – October 17, 2024– Zacks Director of Research Sheraz Mian says, "For the 48 S&P 500 members that have reported Q3 results already, total earnings are up +5.2% on +4.9% higher revenues, with 81.3% beating EPS estimates and 72.9% beating revenue estimates."
Earnings Results Provide Reassuring Economic View
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 positive start in the Q3 earnings season, with results not only beating estimates but also providing a reassuring read on underlying economic trends.
For the 48 S&P 500 members that have reported Q3 results already, total earnings are up +5.2% on +4.9% higher revenues, with 81.3% beating EPS estimates and 72.9% beating revenue estimates. This is a better beats percentage than we have seen from this group of companies in other recent periods.
2024 Q3 is the 5th consecutive quarter of double-digit earnings growth (up +11.4%) for the Tech sector. Excluding the Tech sector's contribution, Q3 earnings for the rest of the index would be up +0.6%.
Earnings growth is expected to accelerate after the modest growth in Q3, with double-digit earnings growth forecasted for the S&P 500 index in three of the next four quarters.
Early Q3 Results Point to Goldilocks Economy
We are off to an excellent start in the Q3 earnings season, with the bank-heavy sample of results at this stage of the reporting cycle not only beating estimates but also providing a very reassuring read-through about the macroeconomic backdrop.
One of the key questions that market participants have been grappling with lately is whether the start of the Fed's easing cycle will be enough to steer the economy towards a soft-landing outcome.
Results from the banks have been beneficial in providing favorable guidance on that count, with JPMorgan (JPM - Free Report) suggesting that the economy was already going through such a growth phase. At the same time, Bank of America (BAC - Free Report) called its in-house projected GDP growth pace in the +1% to 2% range over the current and coming quarters as a no-landing outcome.
JPMorgan and Bank of America are hardly outliers in providing this goldilocks macro view, as most of the industry players noted a stable consumer spending environment and shared nothing they saw as problematic concerning their loan portfolios or the broader economy.
The earnings power of these banks has been constrained for a while now, and the Q3 results are in line with that trend. Q3 earnings at JPMorgan were down -1.9% from the year-earlier period, while the same at Bank of America were down -11.6%.
Q3 earnings for the Zacks Major Banks industry, which includes JPMorgan, Bank of America, and other major banks, are expected to be down -3.6% from the same period last year on +0.6% higher revenues. The positive growth for the sector is coming from the insurance and brokerage/asset management industries. However, the earnings outlook of the insurance space has taken a hit with the recent run of active storm season.
The Earnings Big Picture
Looking at Q3 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are now expected to be up +3.6% from the same period last year on +4.6% higher revenues.
The Q3 earnings growth pace would improve to +5.8% had it not been for the Energy sector drag (decline of -24.2% for Energy). On the other hand, quarterly earnings growth for the index would drop to +0.6% once the Tech sector's hefty contribution is excluded (earnings growth of +11.4% for the Tech sector).
The quarterly earnings growth pace is expected to improve from next quarter onwards.
Please note that this year's +7.7% earnings growth on only +1.8% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +6.9%, and the revenue growth rate improves to +4.2%. In other words, about half of this year's earnings growth comes from revenue growth, with margin gains accounting for the rest.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: JPMorgan and Bank of America
For Immediate Release
Chicago, IL – October 17, 2024– Zacks Director of Research Sheraz Mian says, "For the 48 S&P 500 members that have reported Q3 results already, total earnings are up +5.2% on +4.9% higher revenues, with 81.3% beating EPS estimates and 72.9% beating revenue estimates."
Earnings Results Provide Reassuring Economic View
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:
Early Q3 Results Point to Goldilocks Economy
We are off to an excellent start in the Q3 earnings season, with the bank-heavy sample of results at this stage of the reporting cycle not only beating estimates but also providing a very reassuring read-through about the macroeconomic backdrop.
One of the key questions that market participants have been grappling with lately is whether the start of the Fed's easing cycle will be enough to steer the economy towards a soft-landing outcome.
Results from the banks have been beneficial in providing favorable guidance on that count, with JPMorgan (JPM - Free Report) suggesting that the economy was already going through such a growth phase. At the same time, Bank of America (BAC - Free Report) called its in-house projected GDP growth pace in the +1% to 2% range over the current and coming quarters as a no-landing outcome.
JPMorgan and Bank of America are hardly outliers in providing this goldilocks macro view, as most of the industry players noted a stable consumer spending environment and shared nothing they saw as problematic concerning their loan portfolios or the broader economy.
The earnings power of these banks has been constrained for a while now, and the Q3 results are in line with that trend. Q3 earnings at JPMorgan were down -1.9% from the year-earlier period, while the same at Bank of America were down -11.6%.
Q3 earnings for the Zacks Major Banks industry, which includes JPMorgan, Bank of America, and other major banks, are expected to be down -3.6% from the same period last year on +0.6% higher revenues. The positive growth for the sector is coming from the insurance and brokerage/asset management industries. However, the earnings outlook of the insurance space has taken a hit with the recent run of active storm season.
The Earnings Big Picture
Looking at Q3 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are now expected to be up +3.6% from the same period last year on +4.6% higher revenues.
The Q3 earnings growth pace would improve to +5.8% had it not been for the Energy sector drag (decline of -24.2% for Energy). On the other hand, quarterly earnings growth for the index would drop to +0.6% once the Tech sector's hefty contribution is excluded (earnings growth of +11.4% for the Tech sector).
The quarterly earnings growth pace is expected to improve from next quarter onwards.
Please note that this year's +7.7% earnings growth on only +1.8% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +6.9%, and the revenue growth rate improves to +4.2%. In other words, about half of this year's earnings growth comes from revenue growth, with margin gains accounting for the rest.
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.
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/performancefor information about the performance numbers displayed in this press release.