U.S. Banks to Report Earnings on Friday: Will JPM, C and WFC Impress?
U.S. Banks to Report Earnings on Friday: Will JPM, C and WFC Impress?
The banks represent nearly $1 trillion in market capitalization— much of the U.S. financial sector
- Bank earnings will come into focus to start the U.S. earnings season.
- JPMorgan, Citi and Wells Fargo are to report earnings on Friday.
- Analysts expect solid performances from large U.S. banks.
JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) are scheduled to report earnings on Friday before the market opens. Together, the banks represent nearly $1 trillion in market capitalization and make up a significant portion of the U.S. financial sector. As usual, the big banks mark the start of the quarterly earnings season.
The financial sector lags behind the S&P 500, although it is the third-best performer in the S&P 500, with the SPDR Financial Select Sector exchange-traded fund (ETF) up 10.4% on a year-to-date basis. Investors are bullish on bank stocks ahead of expected interest rate cuts from the Federal Reserve.
All three banks announced increased capital returns to shareholders after passing the Federal Reserve’s annual stress test last month. JPMorgan announced a new quarterly dividend of $1.25 per share, up from $1.15; Citigroup raised its quarterly dividend to $0.56 from $0.53; and Wells Fargo increased its quarterly dividend to $0.40 from $0.35.
What do investors expect?
For the quarter ending June 30, investors expect JPMorgan to post earnings per share (EPS) of $4.26, with estimates ranging from $3.86 to $5.79. Revenue is expected to come in at $39.5 billion, which would be down slightly from $42.4 billion a year ago. JPM beat EPS estimates in three of the last four earnings.
Expectations for Citi are for EPS of $1.41 on $20.1 billion in revenue. EPS estimates range from $1.29 to $1.66. Citi reported $19.44 billion in the current quarter ended last year. Analysts were slightly more optimistic about earnings 30 days ago. Citi beat EPS estimates in four of the last four earnings.
Wells Fargo is expected to post EPS of $1.28, with a range from $1.16 to $1.39. Revenue is expected to come in at $20.23 billion, mostly in line with last year’s $20.5 billion revenue. Estimates for WFC have been mostly steady over the last 30 days. WFC beat EPS estimates in four of the last four earnings.
**EPS and revenue figures sourced from Yahoo! Finance**
Trading bank earnings
Options markets don’t expect huge moves from the banks, likely because of their above-par performance vs. the broader stock market and increased appetite to reward shareholders.
JPM is currently trading with the highest implied volatility rank (IVR), and the July 19 expiration shows an expected move of +/- 6.44 points. That is only about 3.1% of the stock price.
While C trades with a lower IVR of 27.5, the July 19 expiration shows an expected move of +/- 2.28 points, translating to about 3.5% of the stock price. That said, it still doesn’t offer much volatility to play earnings.
WFC is trading with an IVR of 37.3 and shows an expected move of 2.31 for the July 19 expiration. That gives a 3.9% expected move, which is the highest of the group.
The low IV environment and modest expected moves don’t leave much in the way of premium selling strategies but if you’re bullish and expect one of these banks to outperform after announcing results, buying a call spread provides a viable strategy to play that view.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.