JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co. (NYSE:WFC) kick off financial earnings tomorrow morning, but just what can we expect from those reports? Analysts think Wells Fargo could surpass expectations, while JPMorgan will probably post declines in earnings and revenue compared with the same quarter a year ago.
JPMorgan Chase earnings subject to high hopes
Shares of JPMorgan Chase & Co. (NYSE:JPM) have risen to new heights over the last year or so, but the bank might not be able to beat expectations enough to satisfy investors. The bank performed well in 2013, and its shares rose in spite of its numerous financial woes as it beat expectations in three of the last four quarters. But will 2014 bring more of the same?
On average, analysts are expecting JPMorgan Chase to report earnings per share of $1.35, which would be about a 3% decline from the same quarter a year ago. Consensus estimates for the bank’s quarterly revenue indicate that analysts are expecting $23.68 billion in revenue, which is also a nearly 3% decline. Whisper estimates are quite a bit more optimistic than these numbers, however, according to Investor Place. Some investors apparently think JPMorgan will surprise and actually report an increase in earnings rather than a decline.
The Motley Fool notes that because of JPMorgan Chase & Co. (NYSE:JPM)’s valuation, its stock looks cheap—even though it has had to write off billions of dollars in legal expenses. Its forward earnings multiple is still less than 10 though, which is why shares have done so well.
Wells Fargo could beat expectations
Analysts are a little more positive on Wells Fargo & Co. (NYSE:WFC). They believe the mortgage firm will beat expectations through its continued efforts to cut costs. Also Wells Fargo is expected to release some of the reserves it set aside to cover bad loan.
Like JPMorgan, Wells Fargo shares have also increased recently, hitting new all-time highs as the company posted strong earnings growth over the last few years. However, The Motley Fool predicts that Wells Fargo is running into some headwinds which could slow down its growth, allowing peers JPMorgan and Bank of America Corp (NYSE:BAC) room to grow more quickly.
Wells Fargo & Co. (NYSE:WFC) is expected to report earnings of 98 cents per share, which would be a 6.5% increase year over year. Analysts are estimating that the firm will report $20.69 billion in revenue for the fourth quarter, which would be a nearly 6% decline compared to the same quarter a year ago. Wells Fargo has managed to beat expectations in the last four consecutive quarters.