Earnings season is here, and everybody is worried. Despite the excellent start to 2012, returns leveled off in the second half, disappointing the high hopes for spring. Even Apple Inc. (NASDAQ:AAPL) disappointed in their last earnings report. Arguably the most important stocks to watch out for in the coming weeks will be the financial stocks.
A report published today, from Raymond James Research, sets out in broad strokes what is to be expected from financial earnings in the coming weeks. Results are expected to be boosted by generally better indicators in the overall economy.
The Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More
Credit quality is expected to have been better in the last quarter of 2012. In conjunction with reductions in costs across the financial sector, this is expected to improve profitability. The real issue is revenue generation. There is only so much cost cutting the sector can do. There were headwinds in the fourth quarter, however.
The fiscal cliff deal, along with a general slow down in the economy last year may create a drag on the earnings reports. The report estimates an overall bank EPS growth of 12% in 2012. The report estimates a slower growth rate of 9% for 2013. The report adds that if 10 year bond yields remain at current levels, banks earnings growth is likely to slow even more in 2013.
Investors have generally anticipated most of these trends in the financial sector. Bank shares outperformed the S &P 500 in the fourth quarter. BKX, an index of 24 large cap banks, was up by 3.4% in the quarter, compared to a decline of around 1% in the wider index. Despite the good results expected from banks this earnings season, earnings are already priced into the market. A surprise could, of course, upset that applecart.
That’s it for the sector in general, below you can find the expected quarterly earnings from the major North American banks.
Morgan Stanley (NYSE:MS): The analyst consensus suggests that Morgan Stanley (NYSE:MS) will earn $0.58 per share when it announces its fourth quarter earnings on January 14. In the same period last year the firm lost $0.14 per share.
JPMorgan Chase & Co. (NYSE:JPM):Analysts reporting to Reuters had a consensus estimate for Q4 earnings of $1.33 per share for the bank. The firm earned around 90 cents per share in the same period last year. The company is expected to announce its earnings on January 16.
Citigroup Inc. (NYSE:C): Citigroup Inc. will report its earnings on January 17. The company is expected to earn $1.25 per share. In the fourth quarter of 2011, the company earned 31 cents per share.
Goldman Sachs Group, Inc. (NYSE:GS): Analyst consensus predicts Goldman Sachs Group, Inc. (NYSE:GS) will earn $3.45 for the fourth quarter of 2011. The company earned $1.83 in the period last year, and will announce its 2012 Q4 earnings on January 16.
Bank of America Corp (NYSE:BAC): Bank of America Corp will announce its earning of January 17. The bank is expected, according to consensus, to earn 21 cents per share. In the same period last year the company lost 14 cents per share.
Wells Fargo & Company (NYSE:WFC): Wells Fargo will announce its earnings on the 15th of January. Consensus estimates point to earnings per share of 87 cents per share. The company earned 73 cents per share last year.