- JPMorgan Chase (JPM) — Largest U.S bank could take some hefty losses from exposure to Russia.
- BlackRock (BLK) — World’s largest asset manager, volatility may sap their earnings.
- Wells Fargo (WFC) — Major bank that’s still down this year but has been aggressively repurchasing its stock.
- Morgan Stanley (MS) — Has weathered the current volatility better than others and could see a bounce after earnings.
- Goldman Sachs (GS) — A well established money maker that’s currently expanding it’s retail banking business.
- Citigroup (C) — International exposure puts this bank’s earnings at risk.
- State Street (STT) — Regional bank that might surprise shareholders.
Earnings for the first quarter of the year kick-off next week with reports from the largest U.S. banks and fund managers. The lenders could use some good news.
The Dow Jones U.S. Banks Index is down 20% since mid-January amid ongoing market volatility and uncertainty related to inflation and the war in Ukraine. The Federal Reserve (Fed) has begun to raise interest rates and that is normally a positive catalyst for banks as a higher rate environment enables them to charge more interest on their various loans. However, concerns about the pace and aggressiveness of the Fed’s tightening cycle has led bank stocks to fall in recent months rather than rise. A strong parade of earnings in the coming week could help to reverse the downward trend.
Here are seven financial stocks reporting earnings during the week of April 11.
JPMorgan Chase (JPM)
The week begins with a print from JPMorgan Chase (NYSE:JPM), the largest U.S. bank with nearly $4 trillion of assets under management. The lender’s stock could use a boost that a solid earnings beat would provide. Year to date, JPM stock is down 20% at $129.23 a share. In addition to the market downturn, the share price has taken a hit from questions about the bank’s push into retail banking in England. Plans to spend $15 billion this year on “new projects,” mostly new technologies are raising concerns as well.
In terms of its Q1 earnings, analysts are calling for JPMorgan Chase to report earnings per share (EPS) of $2.69 on revenues of $31.08 billion. A beat to the upside for the quarter ended March 31 might be hard to achieve. JPMorgan Chase chief executive officer (CEO) Jamie Dimon recently warned that the bank could lose $1 billion on its exposure to Russia, which has been heavily sanctioned since it invaded Ukraine in late February.
The world’s largest asset manager with $10 trillion currently under management, BlackRock’s (NYSE:BLK) stock has also taken a drubbing this year, down 19% since January at $739.17 per share. The asset manager recently made headlines for saying that stock picking matters more than ever in the current market that is rife with volatility. Inflation, elevated energy prices, aggressive central bank tightening, war in Europe, and supply chain constraints are likely to continue to wreak havoc in markets, says BlackRock.
BlackRock CEO Larry Fink also made news in recent weeks after issuing his annual letter to shareholders in which he said Russia’s invasion of Ukraine is reversing the norms of globalization that were established after World War II. Like most U.S.-based financial institutions, BlackRock has suspended the purchase of any Russian securities in its actively managed and index portfolios. Wall Street is forecasting that BlackRock will report EPS of $9.08 on revenues of $4.86 billion when it announces its Q1 numbers.
Wells Fargo (WFC)
Shares of Wells Fargo (NYSE:WFC) are also down on the year, though not as much as most other bank stocks. So far in 2022, WFC stock is down 8% to $46.85 a share. A strong earnings report for the fourth and final quarter of 2021 has helped Wells Fargo weather the current market volatility better than most other financial institutions.
Does Wells Fargo have another strong quarter to reveal? The lenders Q4 results were helped by an $875 million reserve release that the bank had set aside to safeguard against potential loan losses during the pandemic. Wells Fargo also continues to aggressively repurchase its own stock. In last year’s fourth quarter, it bought back 139.7 million of its shares worth approximately $7 billion. Analysts are calling for Wells Fargo to report EPS of 80 cents on revenues of $17.79 billion next week.
Morgan Stanley (MS)
Investment bank Morgan Stanley (NYSE:MS) has been more pessimistic than most financial institutions when it comes to the outlook for the stock market. Morgan Stanley’s lead analyst, Mike Wilson, recently called for a correction and decline of 13% in U.S. equity markets between now and September of this year. Wilson has also issued repeated warnings about risks to European stocks spreading globally. Morgan Stanley’s most pessimistic outlook came as U.S. equities were rallying at the end of March.
For its part, Morgan Stanley’s stock has declined in tandem with shares of other lenders. Year to date, MS stock is down 18% to $82.01 a share. In early February, the share price was floating around $110. If Morgan Stanley’s Wilson is correct, the pain for bank stocks is likely to worsen before it improves. We’ll see if Morgan Stanley’s earnings can give the stock a bounce. Analysts have forecast that the investment bank will announce EPS of $34.25 on revenues of $288.99 million.
Goldman Sachs (GS)
The money minting machine that is Goldman Sachs (NYSE:GS) also reports earnings next week. And the leading Wall Street investment bank has a way of making money in even the most challenging conditions. Year to date GS stock is also down 20% to $312.36 a share. Most analysts are singling out Goldman Sachs as a buy the dip opportunity given its strong earnings track record and growth potential. Morgan Stanley recently placed a $418 price target on the stock, implying a 34% upside from current levels.
Goldman Sachs continues to push into retail banking, which it hopes will complement its commercial loan and deals units. A leader in mergers and acquisitions as well as initial public offerings, the bank’s retail banking unit, branded Marcus, still has a ways to go to catch-up. However, the investment bank is also pushing into consumer loans, offering home equity lines of credit and other products. Wall Street has forecast that Goldman Sachs will report EPS of $9.06 on revenues of $12.07 billion for Q1 2022.
Citigroup (NYSE:C) is one of the most international of the big U.S. banks with operations in markets all over the world. While that is normally a good thing, it could be problematic this year given that war is raging in Europe and countries everywhere are grappling with inflation rates not seen since the 1980s. The lender has been pulling out of select foreign markets lately, recently announcing that it is selling its Indian retail business for $1.6 billion.
As with other U.S. lenders, Citigroup’s exposure to Russia could impact its balance sheet in coming quarters. Russia is an especially acute issue for Citigroup as it has the most extensive operations in that country among American banks. Citigroup announced plans last April to sell its Russian consumer division, and it recently accelerated its timetable for getting out of the country. We’ll get an idea of how Citi’s exposure to Russia is impacting it when the bank issues its Q1 numbers. Analysts expect Citigroup will announce EPS of $1.63 on revenues of $18.29 billion.
State Street (STT)
Lastly, we’ll hear from Boston-based State Street (NYSE:STT), which is more of a regional than national bank. Founded in 1792, State Street is the second oldest continually operating bank in the U.S. Year to date, STT stock is down, although not as much as the larger institutions that it competes against. So far in 2022, State Street stock is down 9% at $84.42 per share. The stock has been essentially flat over the past year. Despite the poor showing, many analysts remain bullish on State Street stock, noting its attractive dividend yield of 2.74%, which is good for 57 cents a quarter.
Analysts are looking for State Street to report EPS of $1.48 on revenues of $3.06 billion next week. State Street has received several upgraded analyst ratings in recent weeks, along with a few downgrades. However, most are placing an “overweight” rating on the shares and noting that the bank should perform well going forward in a high interest rate environment. The median price target on STT stock is $112, suggesting 35% upside from the stock’s current price.