Banking, finance, and taxes

What to Expect From Friday's Major Bank Earnings

Chris Lange

Published: October 13, 2016 12:15 pm

Last Updated: January 13, 2020 2:26 am

Three of the major banks are reporting their third-quarter financial results before the markets open on Friday. Although only one of these financial institutions has been under investigation recently for systematic fraud, all have been feeling it as regulators are becoming more imposing. Solid earnings for this quarter have the potential to take the heat off the stock if only a little.

Citigroup Inc. (NYSE: C) has been making a very strong push since the Brexit this summer, with shares up over 25% in that time. Second-quarter results helped with these gains over the summer, even though the bank warned that profits for the quarter could drop by as much as 25% in June. However, results were much better than expected.

Looking at the third quarter, Citigroup has not had any real hang-ups. Compared to this group of banks, it has performed the best in this time. The consensus estimates from Thomson Reuters are $1.16 in earnings per share (EPS) and $17.37 billion in revenue.

When it reported its second-quarter results, JPMorgan Chase & Co. (NYSE: JPM) set the standard for the other major banks. This megabank is known for its ironclad balance sheet, and at that time, it would seem, JPMorgan’s earnings lifted the market, giving a little more faith to the U.S. financial sector, as well as the rally that lasted through late September.

Will JPMorgan have a repeat performance in the third quarter and pull the market up again? This has yet to be seen. But at a glance, its stock has performed well since the Brexit in terms of its peer group. As for what analysts are saying, the consensus estimates are $1.39 in EPS and revenue of $23.94 billion for this quarter.

Wells Fargo & Co. (NYSE: WFC) has been at the center of controversy in the financial sector after it was revealed that the company was creating unauthorized bank accounts and cross-selling these accounts without actually selling. Things got bad enough that former CEO John Stumpf was forced to step down from his position after facing a barrage of questions and accusations from congressional committees.

Keep in mind that this is the only major bank that has been worse off since the Brexit, which is no easy feat. Even if earnings manage to impress, it’s very possible that the negative sentiment around this stock could cancel out any gains. But on the other hand, one has to ask if this stock has bottomed out. The consensus estimates call for EPS of $1.01 and $23.19 billion in revenue.

Citigroup shares were trading at $47.83 midday Thursday, with a consensus analyst price target of $54.26 and a 52-week trading range of $34.52 to $56.46.

Shares of JPMorgan were last seen at $66.99, with a consensus price target of $71.27 and a 52-week range of $52.50 to $69.06.

Wells Fargo traded at $44.38, in a 52-week range of $43.55 to $56.34. The consensus price target is $50.14.