Weak trading activities continued in the fourth quarter of 2017. This might have an adverse impact on Bank of America’s (BAC - Free Report) fourth-quarter results slated to be released tomorrow, given the significant dependence of its top line on this source.
Though there hasn’t been significant change in market volatility in the last quarter, the decline in trading revenues will primarily be due to comparison with the prior-year quarter that witnessed higher volatility following the U.S. Presidential election results. Also similar to the last couple of quarters, lower fixed income trading is expected to be largely responsible for lower trading revenues in the to-be-reported quarter.
In 2017, several political and geopolitical developments, hike in interest rates, passage of the tax act and lack of any significant progress on the regulatory reforms proposed by the Trump administration should have incited volatility. But subdued inflation in the United States and marginal increase in long-term interest rates along with absence of specific catalysts have been a drag.
At an investor conference in early December 2017, BofA CEO Brian Moynihan stated that the company’s trading business till then in the fourth quarter was down nearly 15% year over year. In fact, there has been hardly any change in the scenario since then.
Overall Earnings & Revenue Expectations
Notably, for BofA, the Zacks Consensus Estimate for earnings of 44 cents indicates 10% growth on a year-over-year basis. Also, the Zacks Consensus Estimate for sales of $21.3 billion implies a 6.5% increase from the prior-year quarter.
Click here to know about the other factors that might influence BofA’s overall results.
Conclusion
Amid a tough operating backdrop, slump in trading revenues is expected to hamper this Zacks Rank #2 (Buy) stock’s top-line growth to some extent.
(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)
However, the Zacks Consensus Estimate for BofA’s Global Markets segment’s (under which trading revenues are accounted for) revenues of $3.54 billion reflects an increase of 1.9% from the prior-year quarter.
Trading Revenue Projections for Other Companies
Both Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) are expected to report lower trading revenues in the to-be-reported quarter.
Notably, JPMorgan (JPM - Free Report) already reported a 26% fall in Markets revenues mainly due to a 34% plunge in fixed income trading revenues.
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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.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Weak trading activities continued in the fourth quarter of 2017. This might have an adverse impact on Bank of America’s (BAC - Free Report) fourth-quarter results slated to be released tomorrow, given the significant dependence of its top line on this source.
Though there hasn’t been significant change in market volatility in the last quarter, the decline in trading revenues will primarily be due to comparison with the prior-year quarter that witnessed higher volatility following the U.S. Presidential election results. Also similar to the last couple of quarters, lower fixed income trading is expected to be largely responsible for lower trading revenues in the to-be-reported quarter.
In 2017, several political and geopolitical developments, hike in interest rates, passage of the tax act and lack of any significant progress on the regulatory reforms proposed by the Trump administration should have incited volatility. But subdued inflation in the United States and marginal increase in long-term interest rates along with absence of specific catalysts have been a drag.
At an investor conference in early December 2017, BofA CEO Brian Moynihan stated that the company’s trading business till then in the fourth quarter was down nearly 15% year over year. In fact, there has been hardly any change in the scenario since then.
Overall Earnings & Revenue Expectations
Notably, for BofA, the Zacks Consensus Estimate for earnings of 44 cents indicates 10% growth on a year-over-year basis. Also, the Zacks Consensus Estimate for sales of $21.3 billion implies a 6.5% increase from the prior-year quarter.
Click here to know about the other factors that might influence BofA’s overall results.
Conclusion
Amid a tough operating backdrop, slump in trading revenues is expected to hamper this Zacks Rank #2 (Buy) stock’s top-line growth to some extent.
(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)
However, the Zacks Consensus Estimate for BofA’s Global Markets segment’s (under which trading revenues are accounted for) revenues of $3.54 billion reflects an increase of 1.9% from the prior-year quarter.
Trading Revenue Projections for Other Companies
Both Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) are expected to report lower trading revenues in the to-be-reported quarter.
Notably, JPMorgan (JPM - Free Report) already reported a 26% fall in Markets revenues mainly due to a 34% plunge in fixed income trading revenues.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
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.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in 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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