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Expectations for 5 US Banks

Given the importance of the imminent Q1 2022 earnings season we thought we would take a look at Wall Street expectations for 5 very large US Banks, all set to report this week

JPM Morgan (JPM)

JPM announces earnings on Wednesday

  • JPM is down 16 percent year-to-date and, at $134 per share is back to its February 2020 (pre-pandemic) stock price

  • Analysts expect JPM to report $2.69/share for Q1 2022, although they have cut their estimates by 8 percent over the past 90 days ($2.93/share).

  • Wall Street expects JPM to earn $11/share this year. As with their Q1 earnings forecasts, however, analysts have been reducing 2022 expected earnings, which were $12/share 90 days ago.

Goldman Sachs (GS)

Goldman Sachs announces earnings on Thursday

  • GS is also down 16 percent YTD. It is, however, still 28 percent above its February 2020 pre-pandemic stock price.

  • Analysts expect GS to report $9.06/share for Q1. Over the last 90 days they have reduced their estimate for the just-completed quarter by 16 percent.

  • Whole year estimates for 2022 stand at $38.10/share, 5 percent less than analysts expected 90 days ago.

Citibank (C)

Citibank also reports on Thursday

  • Not to sound like a broken record, but C is also down 16 percent YTD. Its performance since pre-pandemic February 2020, however, is horrible: down 37 percent on a price basis.

  • Analysts expect C to earn $1.63/share for Q1 2022, down 24 percent from their $2.14/share estimate for the quarter 90 days ago.

  • Wall Street is looking for C to earn $6.70/share in 2022; 90 days ago, that estimate was 17 percent higher at $7.85/share

Wells Fargo (WFC)

Another bank reporting on Thursday

  • WFC is up 2 percent YTD, but down 9 percent from its immediately pre-pandemic highs, which came in December 2019.

  • Unlike the names above, analysts have not been cutting their Q1 expectations, which at $0.80/share today are the same as 90 days ago.

  • Even better, analysts’ earnings estimates for all of 2022 have increased by 5 percent in the last 90 days, to $3.94/share.

Morgan Stanley (MS)

Morgan Stanley reports on Thursday

  • MS is down 15 percent YTD, but it holds the crown among the 5 names we are discussing today in terms of immediately pre-to-post-pandemic price return: +46 percent.

  • Q1 estimates for MS have come down by 13 percent over the last 90 days, to $34.25/share.

  • Whole year 2022 estimates are also down over the last 3 months, by 6 percent to $143.67.

Summary

The story among the banks is much the same. Analysts have been dropping their expectations of 2022 earnings and stock prices have fallen in time with those reductions.

For all except Wells Fargo (WFC), where analysts have actually increased their estimates for earnings. You will note the WFC share price has performed the best of the 5 we looked at.

Analyst forecasts are very important for stock prices. In fact, we would say they are the single most important factor that affects a stocks price.

You can see from these 5 examples that analysts cutting forecasts is not good for stock prices. Whereas, increases in analysts forecasts is very positive.

Of the 5 stocks presented here, WFC would be our pick for this reason.

This fact, that analysts predictions can drive stock prices, is exactly what our Top 30 Trading Strategy is built around.

Every month, we find the 30 stocks that Wall Street analysts have upgraded the most. It is a fantastic place to start looking for good stocks.

You can read more about our Top 30 strategy here and sign up for our free Top 30 Trading Strategy newsletter.

Disclosure

Employees of Capital 19 presently own shares in some of the companies mentioned in this report.

Warning

Stock values can go down as well as up. It is possible to lose 100% of your investment in a stock. Any advice given by Capital 19 is general advice only and does not take your personal circumstances into account.

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