The three major U.S. equity indexes closed lower for a third straight session Wednesday. The Dow Jones industrials ended 0.7% lower, the S&P 500 dropped 0.5% and the Nasdaq shed 0.2%. Nine of 11 S&P sectors closed lower. Consumer cyclicals (1.8%) and consumer staples (0.1%) were the only sectors to close higher.

Thursday brings the weekly report on new and continuing claims for jobless benefits (new claims rose by 9,000, defying estimates for a small drop) and the latest producer price index (PPI) reading. Economists expected a month-over-month increase of 0.9% in the PPI, but the index added 1.1%. Core PPI, excluding food and energy, was forecast to rise by 0.5% month over month but the reported increase was slightly lower at 0.4%. All three major indexes were trading lower Thursday morning.

Before markets opened on Thursday, JPMorgan reported second-quarter results that missed estimates on both the top and bottom lines. The bank also suspended its stock buyback program. Shares traded down by about 3% in Thursday’s premarket.

Morgan Stanley also missed top and bottom line estimates Thursday morning. The stock was down about 1% in premarket trading.

Taiwan Semiconductor reported better than expected results on both the top and bottom lines and issued upside revenue guidance for the third quarter. Shares were about 1.5% higher in premarket action.

Ericsson missed the consensus profit estimate but did beat the revenue expectation. The company warned that geopolitical tensions and inflation will lead to higher costs. Shares were down about 9%.

Conagra beat the consensus profit estimate but fell short of revenue expectations. The company issued downside earnings guidance for its 2023 fiscal year and shares traded down by about 2.8% early Thursday.

We have previewed four companies set to report quarterly results first thing Friday morning: Citigroup, UnitedHealth, US Bancorp and Wells Fargo. And there are even more, as Bank of New York Mellon, Progressive and State Street also will report results before Friday’s opening bell.

Here is a look at what to expect from four companies on deck to report quarterly results Monday morning.

Bank of America

Shares of Bank of America Corp. (NYSE: BAC) have dropped by about 22.5% over the past 12 months. All of the decline came in the second quarter. Net interest income is expected to increase throughout the year as the Federal Reserve hikes interest rates, and trading revenue could be strong as investors chase returns. But fee revenue for mortgage originations and investment banking is likely to fall.

This is pretty much the story for all of the country’s largest banks. How BofA demonstrates that it is preparing for a near-certain slowdown, if not outright recession, will have a big impact on investors.
Analysts are bullish on BofA, with 17 of 26 having a Buy or Strong Buy rating. The rest rate the stock at Hold. At a recent share price of around $30.80, the implied gain based on a median price target of $41.50 is 34.7%. At the high price target of $58.00, the implied upside is 88.3%.

Second-quarter revenue is forecast at $22.79 billion, which would be down by 1.9% sequentially but up by 6.1% year over year. Adjusted earnings per share (EPS) are expected to come in at $0.75, a drop of 6.6% sequentially and 27.2% year over year. For the full 2022 fiscal year, analysts currently forecast EPS of $3.20, down 10.3%, on revenue of $93.56 billion, up about 5%.

The stock trades at 9.6 times expected 2022 EPS, 8.2 times estimated 2023 earnings of $3.75 and 7.3 times estimated 2024 earnings of $4.21 per share. The stock’s 52-week range is $30.40 to $50.11, with that low posted on Wednesday. BofA pays an annual dividend of $0.84 (yield of 2.72%). Total shareholder return for the past 12 months was negative 21%.

Charles Schwab

Charles Schwab Corp. (NYSE: SCHW) has seen its share price fall by about 13.3% over the past 12 months. The firm paid a $187 million SEC fine last month related to charges that it put its interests ahead of its robo advisors’ clients’ interests. Schwab did not admit or deny the charges. Unlike the big U.S. banks, Schwab is relatively well-protected from both the credit and market risks associated with a possible recession.

Analysts are mostly bullish on the stock, with 13 of 17 rating the shares a Buy or Strong Buy and the rest having Hold ratings. At a share price of around $61.60, the upside potential based on a median price target of $84.00 is 36.4%. At the high target of $105.00, the upside potential reaches 70.5%.

Second-quarter revenue is forecast at $5.04 billion, up 7.9% sequentially and by 11.3% year over year. Adjusted EPS are forecast to rise by 18.1% sequentially and by 30.0% year over year. The current estimates for fiscal 2022 call for revenue of $20.72 billion, up nearly 12%, and EPS of $3.86, up 18.9%.

The stock trades at 15.9 times expected 2022 EPS, 12.5 times estimated 2023 earnings of $4.92 and 11.6 times estimated 2024 earnings of $5.29 per share. The stock’s 52-week range is $59.35 to $96.24. Schwab pays an annual dividend of $0.80 (yield of 1.29%). Total shareholder return for the past year is negative 13.5%.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) has posted a 12-month share price decline of about 22%. For the year to date, the stock is down 28%. The slowdown in IPOs and M&A likely will hit the firm’s investment banking revenue harder than the rise in net interest income will boost its overall revenue. Trading revenue should be solid, and what the bank projects for the rest of the year will be critical for investors.
Of the 27 analysts covering Goldman Sachs, 17 have a rating of Buy or Strong Buy and the rest have Hold ratings. At a share price of around $290.20, the upside potential based on a median price target of $381.00 is 31.3%. At the high price target of $505.00, the implied upside is 74.0%.

Second-quarter revenue is forecast to come in at $10.77 billion, a decline of about 16.7% sequentially and a drop of 30% year over year. Adjusted EPS are forecast at $6.70, down almost 38% sequentially and 55.4% lower year over year. The forecast for the 2022 fiscal year calls for revenue of $46.29 billion, down 22%, and EPS of $34.39, down about 42.2%.

The stock trades at 8.4 times expected 2022 EPS, 7.7 times estimated 2023 earnings of $37.68 and 7.0 times estimated 2024 earnings of $41.16. The stock’s 52-week range is $278.15 to $426.16. Goldman Sachs pays an annual dividend of $8.00 (yield of 2.76%). Total shareholder return for the past 12 months was negative 21.1%.

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Synchrony Financial

Shares of Synchrony Financial (NYSE: SYF) have retreated more than 38% in the past 12 months. The stock hit a 52-week low in late June but has added nearly 9% over the past two weeks. Synchrony, which issues store and store-branded credit cards, depends on consumer spending, not a particularly good place to be as inflation rages and recession predictions abound. If consumers keep spending, rising interest rates will give the company a boost. If not …

Of 21 analysts covering the firm, 14 have a Buy or a Strong Buy rating and six more rate the stock at Hold. At a share price of around $30.00, the implied gain based on a median price target of $44.50 is 48.3%. At the high price target of $65.00, the upside potential on the stock is 116.7%.

Second-quarter revenue is forecast at $2.74 billion, down 2% sequentially but 14.2% higher year over year. Adjusted EPS are forecast to tumble by 20% sequentially and by 33.5% year over year. The current estimates for the 2022 fiscal year call for revenue of $11.23 billion, up 10.2%, and EPS of $5.65, down 17.6%.

The stock trades at around 5.3 times expected 2022 EPS, 5.4 times estimated 2023 EPS of $5.52 and 5.4 times estimated 2024 earnings of $5.51. The stock’s 52-week range is $27.21 to $52.49. The company pays an annual dividend of $0.88 (yield of 2.89%), and total shareholder return for the past year was negative 37%.

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