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JPMorgan Chase (JPM)
JP Morgan (JPM), the banking behemoth and Dow component, ahead of its earnings release. The company has been on a nice run for the last couple of months thanks to hopes for higher rates, but this report will be a test if this trend can continue heading into 2017.
Fortunately for JPM investors, shares of the stock have a Zacks Rank #2 (buy), and the company was actually just upgraded into this territory within the past week. Additionally, the industry rank is just inside the top 50%, so that is always welcomed news heading into a release.
However, it isn’t all roses for JPM, as the most recent earnings estimates have been a bit sluggish, giving the company an Earnings ESP in negative territory, while it does have an ‘F’ VGM score as well. These conflicting numbers suggest it will be a volatile report, though this is likely to be one where the outlook weighs on the shares more than anything. We expect JPM to report earnings of $1.39/share.
PNC Financial Services (PNC)
PNC Financial Services (PNC) is a Pittsburgh-based bank, and the company has been on a nice trend over the past few months which includes a 10% gain. While this is obviously nice for investors, it really puts the pressure on this coming earnings season.
Fortunately for investors, PNC has a Zacks Rank #2 (buy) right now, while the stock is in a top 50% industry. The company also has a pretty impressive track record in earnings season which includes just two misses in the last five years.
However, investors should definitely note that the fundamental picture isn’t that impressive for PNC—a VGM score of ‘D’—while earnings estimates have been a bit sluggish. Estimates have been falling for much of the year and it will be crucial for this to turn around soon if PNC is going to keep up the momentum. We are looking for earnings of $1.78/share for PNC this quarter.
Citi (C) has seen some incredibly volatile trading lately, but shares are definitely on the right track over the past few months, though earnings season will definitely put that to the test.
Investors should note that C has a great track record in earnings season, and the company hasn’t missed earnings estimates since early 2015. Additionally, the stock has a Zacks Industry Rank in the top 50%, so this is a good combination heading into the report.
Still, the stock has a VGM score of ‘D’, while it has a Zacks Rank #3 (Hold), so it is hard to get too inspired by those figures. The company has also seen sluggish earnings estimates as of late, so the stock has arguably run ahead of earnings, at least leading into the report.
This could make this coming report a volatile one, though like many banking stocks this quarter, the outlook and expectations for rate hikes looks likely to weigh heavily on shares. Citigroup reports on October 14th before the bell and we are looking for earnings of $1.15/share.
Wells Fargo (WFC) has been under fire thanks to its recent scandal, and a retiring CEO. Shares have been under pressure for quite some time, and this is in stark contrast to other financials which have been able to prosper in the past few months.
The trend could continue for Wells Fargo in the near term too, at least if earnings estimate revisions are any guide. The company has been seeing a sluggish trend on this front, while it has an ‘F’ VGM score as well.
However, it isn’t all bad news for WFC, as the stock is in an industry that is in the top 50% overall, while the interest rate situation is going be a tailwind for the stock as well. Additionally, WFC just moved out of sell territory, so at least that is something for WFC investors these days.
Still, WFC is probably a stock to stay away from for most investors this earnings season, at least due to the overhang of the ongoing scandal. This is likely to dominate the picture on the earnings call, and it could influence the stock no matter how the actual earnings come in this quarter.
Furthermore, our fellow analyst, David Bartosiak, covered Wells Fargo earlier this week by giving us his thoughts on the company, and he also gave us some insight on how to play the Options market ahead of Wells Fargo’s earnings announcement. We expect Wells Fargo to report earnings of $1.02 per share.
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