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Should Investors Avoid JPMorgan Chase (JPM) Ahead of Earnings?

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Shares of JPMorgan Chase (JPM - Free Report) climbed on Monday, only days before the banking giant is set to report its first quarter financial results. This could be a sign that investors think JPMorgan is poised to post strong Q1 earnings. Let’s dive into the numbers to see what’s really in store.    

JPMorgan’s move was part of a broader resurgence throughout the market. But volatility is unlikely to disappear any time soon, with trade tensions between the U.S. and China continuing to escalate.

With that said, one of the best ways for investors to come out on top amid this current bearish period is to look for stocks that are set to top quarterly earnings estimates and avoid ones that might miss.

Our current Zacks Consensus Estimates are calling for JPMorgan’s Q1 earnings to soar by 38.2% and hit $2.28 per share. JPMorgan has also experienced solid earnings estimate revision activity recently, having earned five upward earnings estimate revisions within the last 60 days, against just one downward revision.

However, this still doesn’t give investors any idea if JPMorgan is expected to top our current earnings estimate. Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, in one way or the other.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

JPMorgan is currently a Zacks Rank #3 (Hold) and rocks an Earnings ESP of -0.80%. Furthermore, at the moment, the company’s Most Accurate Estimate is $2.26 per share, which comes in 2 cents below our consensus estimate. This means that investors might want to avoid JPMorgan ahead of earnings.

JPMorgan is expected to report its Q1 earnings results before the opening bell on Friday, April 13. Fellow banking powers, Citigroup (C - Free Report) and PNC Financial (PNC - Free Report) , are also set to report their quarterly earnings on Friday, with Bank of America (BAC - Free Report) scheduled for next Monday.

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