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Zacks Earnings Trends Highlights: JPMorgan, Morgan Stanley, Bank of America, and Citigroup
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For Immediate Release
Chicago, IL – October 14, 2021 – Zacks Director of Research Sheraz Mian says, “"For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively from the same period last year."
Solid Start to Q3 Earnings Season
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively from the same period last year, with 80.8% beating EPS estimates and 65.4% beating revenue estimates. The proportion of these 26 index members beating both EPS and revenue estimates is 53.8%.
This is a solid start to the Q3 earnings season, with the EPS beats percentage tracking in-line with historical trends while a relatively smaller proportion of the companies have been able to beat revenue estimates.
Looking at Q3 as a whole, total S&P 500 earnings are expected to be up +27.0% from the same period last year on +14.0% higher revenues. This would follow the +95.0% earnings growth on +25.3% higher revenues in Q2.
Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3. The margins trajectory over the coming periods is a key source of uncertainty in the earnings outlook given the lack of visibility with respect to the duration of inflationary pressures.
Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +42.8% on +13.5% higher revenues in 2021 and increase +9.4% on +6.6% higher revenues in 2022. This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020.
For the small-cap S&P 600 index, total Q3 earnings are expected to be up +43.5% on +15.6% higher revenues, which would follow the +281.5% earnings growth on +34.5% higher revenues in 2021 Q2.
The implied ‘EPS’ for the S&P 500 index, calculated using the current 2021 P/E of 22.5X and index close, as of October 12th, is $193.70, up from $135.66 in 2020. Using the same methodology, the index ‘EPS’ works out to $211.92 for 2022 (P/E of 20.5X) and $233.23 in 2023 (P/E of 18.7X). The multiples have been calculated using the index’s total market cap and aggregate bottom-up earnings for each year.
The fact that JPMorgan (JPM - Free Report) shares lost ground following the Q3 earnings release on October 13th is not because of the revenue ‘miss’ but rather how this stock responds to quarterly releases. The stock responded positively to quarterly results only once out of the last seven quarterly releases (July 14th, 2020), with the stock losing ground the other six times in response to otherwise strong results.
In other words, the market’s reaction to the JPMorgan report offers limited insight into how good or otherwise the bank’s quarterly results have been.
There were no major surprises in the JPMorgan report, though management’s comments about signs of stabilization in loan demand and the temporary nature of the ongoing supply-chain overhang were positive and reassuring. As expected, strength in investment banking helped offset continued softness in the core banking business, helping the bank earn +23.8% more in earnings on a +1.7% gain in revenues.
The JPMorgan report has favorable read-throughs for Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) , the pure-play investment banks, while Bank of America (BAC) and Citigroup (C - Free Report) will likely show the same type of business mix in their quarterly reports.
We expect most companies to mention supply-chain issues in their commentaries, with the tone and substance of guidance turning negative, at least for the current period (2021 Q4). This will cause estimates for the December quarter to come down from the current expected +20.4% growth pace. We experienced something similar with respect to Q3 earnings estimates, which modestly went up earlier but lost ground modestly towards the end of the quarter.
These near-term headwinds notwithstanding, the long-term earnings outlook should remain favorable and reassuring if JPMorgan’s transitory view of the gonging supply-chain issues comes to fruition.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
Zacks Names "Single Best Pick to Double"
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You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: JPMorgan, Morgan Stanley, Bank of America, and Citigroup
For Immediate Release
Chicago, IL – October 14, 2021 – Zacks Director of Research Sheraz Mian says, “"For the 26 S&P 500 members that have reported Q3 results through Wednesday, October 13th, total earnings and revenues are up +32.6% and +17.6%, respectively from the same period last year."
Solid Start to Q3 Earnings Season
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
The fact that JPMorgan (JPM - Free Report) shares lost ground following the Q3 earnings release on October 13th is not because of the revenue ‘miss’ but rather how this stock responds to quarterly releases. The stock responded positively to quarterly results only once out of the last seven quarterly releases (July 14th, 2020), with the stock losing ground the other six times in response to otherwise strong results.
In other words, the market’s reaction to the JPMorgan report offers limited insight into how good or otherwise the bank’s quarterly results have been.
There were no major surprises in the JPMorgan report, though management’s comments about signs of stabilization in loan demand and the temporary nature of the ongoing supply-chain overhang were positive and reassuring. As expected, strength in investment banking helped offset continued softness in the core banking business, helping the bank earn +23.8% more in earnings on a +1.7% gain in revenues.
The JPMorgan report has favorable read-throughs for Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) , the pure-play investment banks, while Bank of America (BAC) and Citigroup (C - Free Report) will likely show the same type of business mix in their quarterly reports.
We expect most companies to mention supply-chain issues in their commentaries, with the tone and substance of guidance turning negative, at least for the current period (2021 Q4). This will cause estimates for the December quarter to come down from the current expected +20.4% growth pace. We experienced something similar with respect to Q3 earnings estimates, which modestly went up earlier but lost ground modestly towards the end of the quarter.
These near-term headwinds notwithstanding, the long-term earnings outlook should remain favorable and reassuring if JPMorgan’s transitory view of the gonging supply-chain issues comes to fruition.
We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.