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Earnings results from the big banks highlight the benefits of diverse revenue streams, with JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) offsetting decelerating loan growth trends with gains from their investment banking businesses. Wells Fargo (WFC - Free Report) has been dealing lately with a number of company-specific issues, but the absence of a strong investment banking franchise was very much apparent in its earnings.

The loan growth deceleration in all of these reports didn’t come as a surprise - we had seen it in Fed data already. Some of the explanations offered include lower mortgage activity in the wake of higher rates, weak car loan demand and strong capital markets activities prompting big commercial and industrial borrowers to use the bond markets instead of banks.

But these explanations for the slowdown are far from satisfactory, particularly given the backdrop of steadily improving consumer and business confidence and expectations of ramped up U.S. economic growth. That said, the tepid loan demand picture is nevertheless a bigger issue for the regional banks that will be coming out with quarterly results this week. In total, we have 178 companies reporting Q1 results this week, including 61 S&P 500 members.

Finance Sector Scorecard

It is still fairly early, with results from only 4 Finance sector companies in the S&P 500 (out of 94 total) out already, but these 4 companies are the some of the largest in the entire index and account for 21.6% of the sector’s total market capitalization in the index. Total earnings for these 4 Finance sector companies are up +10.8% from the same period last year on +3% higher revenues, with all 4 beating EPS estimates but only 2 beating top-line estimates.

This is better earnings growth than we have seen from the same group of 4 banks in other recent periods, which is having a favorable impact on the aggregate Q1 growth expectation for the sector as a whole. The chart below compares the growth pace (earnings and revenue) and proportion of positive surprises for these 4 banks with what we saw from this same group of companies in other recent periods.

Total Q1 earnings for the Finance sector as a whole, combining the reported actuals with the still-to-come estimates, are expected to be up +11% from the same period last year. The table below shows the sector’s Q1 earnings growth expectations at the medium-industry level contrasted with estimates for the following four quarters and actual results for the preceding four periods.

Please note that the Major Banks industry, of which JPMorgan, Wells Fargo and others are part, accounts for roughly 45% of the sector’s total earnings (insurance is the second biggest earnings contributor, accounting for about 25% of the total).

Expectations for Q1 As a Whole

Total Q1 earnings are expected to be up +7.6% from the same period last year on +6.3% higher revenues. This would follow +7.4% earnings growth in 2016 Q4 on +4.7%, the highest growth pace in all most two years.

The table below shows the summary picture for Q1, contrasted with what was actually achieved in Q4.

Please note that the Q1 earnings season follows the strong showing on the earnings front in the preceding reporting cycle. Not only did 2016 Q4 growth reach the highest in two years, but total earnings for the quarter also reached a new quarterly record. The strong Q4 performance came after the first positive earnings growth in 2016 Q3, having declined in each of the preceding 5 quarters.

The chart below shows the Q1 earnings growth contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, the growth pace is expected to ramp up in 2017.

You can see this improved earnings backdrop as the chart below of the S&P 500 relative to forward 12-month Zacks Consensus estimates shows

Please note that the earnings backdrop has not changed in any meaningful way since the November elections, notwithstanding the market’s strong gains since then.

Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.

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Here is a list of the 177 companies including 61 S&P 500 members reporting this week.

Company Ticker Current Qtr Year-Ago Qtr Last EPS Surprise % Report Day Time
M&T BANK CORPMTB1.941.87-0.99%MondayBTO
NETFLIX INCNFLX0.380.0615.38%MondayAMC
UNITED CONT HLDUAL0.351.237.88%MondayAMC
EQUITY LIFESTYLELS0.980.921.25%MondayAMC
FIRST DEFIANCEFDEF0.740.786.58%MondayAMC
CONSOL TOMOKACTO1.910.25-62.66%MondayAMC
SERVISFIRST BCSSFBS0.40.3314.29%MondayAMC
CELANESE CP-ACE1.711.830.66%MondayAMC
BARRACUDA NTWRKCUDA0.050.07100.00%MondayAMC
BROWN & BROWNBRO0.420.442.44%MondayAMC
PINNACLE FIN PTPNFP0.760.710.00%MondayAMC
REEDS INCREED-0.01-0.1250.00%MondayAMC
Yahoo IncYHOO0.080.14.40%MondayN/A
REGIONS FINL CPRF0.220.24.55%TuesdayBTO
UNITEDHEALTH GPUNH2.181.811.93%TuesdayBTO
BANK OF AMER CPBAC0.350.215.26%TuesdayBTO
HARLEY-DAVIDSONHOG0.991.36-15.63%TuesdayBTO
PROLOGIS INCPLD0.630.610.00%TuesdayBTO
COMERICA INCCMA1.010.344.21%TuesdayBTO
JOHNSON & JOHNSJNJ1.771.681.28%TuesdayBTO
SCHWAB(CHAS)SCHW0.370.290.00%TuesdayBTO
GRAINGER W WGWW3.013.183.81%TuesdayBTO
GOLDMAN SACHSGS5.382.686.72%TuesdayBTO
OMNICOM GRPOMC0.960.91.38%TuesdayBTO
MERCANTILE BANKMBWM0.430.526.52%TuesdayBTO
SYNOVUS FINL CPSNV0.510.431.89%TuesdayBTO
LINCOLN ELECTRCLECO0.780.760.00%TuesdayBTO
HANMI FINL CPHAFC0.440.469.52%TuesdayBTO
TILE SHOP HLDGSTTS0.140.14-22.22%TuesdayBTO
GNC HOLDINGSGNC0.330.69-81.08%TuesdayBTO
LAM RESEARCHLRCX2.541.182.28%TuesdayAMC
NAVIENT CORPNAVI0.430.43-2.27%TuesdayAMC
INTL BUS MACHIBM2.342.352.45%TuesdayAMC
INTUITIVE SURGISRG3.973.670.76%TuesdayAMC
HANCOCK HLDG COHBHC0.570.094.92%TuesdayAMC
FULTON FINLFULT0.230.220.00%TuesdayAMC
WESBANCO INCWSBC0.60.61.72%TuesdayAMC
PZENA INVESTMNTPZN0.130.097.14%TuesdayAMC
UNIVL FST PRODSUFPI1.030.95-6.85%TuesdayAMC
WINTRUST FINLWTFC0.910.94.44%TuesdayAMC
CALAMP CORPCAMP0.230.27-14.29%TuesdayAMC
LEGACY TX FINLLTXB0.580.43-3.57%TuesdayAMC
ADTRAN INCADTN0.130.1160.00%TuesdayAMC
EAGLE BCP INCEGBN0.730.685.63%TuesdayAMC
FIRST CT BANCRPFBNK0.240.238.00%TuesdayAMC
HOPE BANCORPHOPE0.320.31-6.06%TuesdayAMC
INTERACTIVE BRKIBKR0.390.51-78.13%TuesdayAMC
ROGERS COMM CLBRCI0.430.350.00%TuesdayAMC
HUNTINGTON BANCHBAN0.220.29.09%WednesdayBTO
US BANCORPUSB0.80.761.23%WednesdayBTO
TEXTRON INCTXT0.460.55-8.05%WednesdayBTO
BLACKROCK INCBLK4.934.252.39%WednesdayBTO
MORGAN STANLEYMS0.90.5524.62%WednesdayBTO
GENUINE PARTSGPC1.051.050.99%WednesdayBTO
ABBOTT LABSABT0.430.411.56%WednesdayBTO
SIGNATURE BANKSBNY2.11.960.96%WednesdayBTO
LITHIA MOTORSLAD1.771.55-0.53%WednesdayBTO
ASML HOLDING NVASML0.990.5125.47%WednesdayBTO
UNION BANKSHARSUBSH0.430.386.67%WednesdayBTO
AKZO NOBEL NVAKZOYN/A0.35N/AWednesdayBTO
CSX CORPCSX0.430.370.00%WednesdayAMC
UTD RENTALS INCURI1.531.416.09%WednesdayAMC
AMER EXPRESS COAXP1.281.45-7.14%WednesdayAMC
SL GREEN REALTYSLG1.571.85-0.69%WednesdayAMC
EBAY INCEBAY0.40.41-6.38%WednesdayAMC
TORCHMARK CORPTMK1.141.083.57%WednesdayAMC
QUALCOMM INCQCOM1.050.890.00%WednesdayAMC
TEXAS CAP BCSHSTCBI0.880.495.49%WednesdayAMC
PREFERRED BANKPFBC0.70.567.58%WednesdayAMC
SEI INVESTMENTSSEIC0.520.467.84%WednesdayAMC
EXPONENT INCEXPO0.460.414.71%WednesdayAMC
SIMMONS FIRST ASFNC0.810.779.64%WednesdayAMC
LASALLE HTL PRPLHO0.430.49-1.59%WednesdayAMC
EAST WEST BCEWBC0.750.747.04%WednesdayAMC
BRANDYWINE RTBDN0.320.316.06%WednesdayAMC
BANCORPSOUTHBXS0.380.398.11%WednesdayAMC
CROWN HLDGS INCCCK0.70.690.00%WednesdayAMC
SELECT COMFORTSCSS0.450.27-21.88%WednesdayAMC
PTC INCPTC0.160.11-33.33%WednesdayAMC
SLM CORPSLM0.150.140.00%WednesdayAMC
STEEL DYNAMICSSTLD0.790.260.00%WednesdayAMC
TRIUMPH BANCORPTBK0.370.27-15.38%WednesdayAMC
WOODWARD INCWWD0.670.6546.00%WednesdayAMC
CYS INVESTMENTSCYS0.260.190.00%WednesdayAMC
PLEXUS CORPPLXS0.760.557.89%WednesdayAMC
CATHAY GENL BCPCATY0.610.57-1.64%WednesdayAMC
COHEN&STRS INCCNS0.470.420.00%WednesdayAMC
HNI CORPHNI0.220.31-3.53%WednesdayAMC
RLI CORPRLI0.480.5419.15%WednesdayAMC
BENCHMARK ELETRBHE0.260.269.76%WednesdayAMC
IDEX CORPIEX0.930.893.23%WednesdayAMC
CDN PAC RLWYCP1.91.82-3.80%WednesdayAMC
HEXCEL CORPHXL0.630.593.23%WednesdayAMC
CORE LABS NVCLB0.390.370.00%WednesdayAMC
UMPQUA HLDGS CPUMPQ0.260.29-10.00%WednesdayAMC
BADGER METERBMI0.260.28-8.70%WednesdayAMC
KAISER ALUMINUMKALU1.121.514.10%WednesdayAMC
VALMONT INDSVMI1.621.498.78%WednesdayN/A
TD AMERITRADEAMTD0.410.380.00%WednesdayN/A
QUEST DIAGNOSTCDGX1.181.123.15%ThursdayBTO
DANAHER CORPDHR0.841.081.94%ThursdayBTO
SHERWIN WILLIAMSHW2.071.815.41%ThursdayBTO
D R HORTON INCDHI0.590.5217.02%ThursdayBTO
VERIZON COMMVZ0.981.06-3.37%ThursdayBTO
BB&T CORPBBT0.70.690.00%ThursdayBTO
KEYCORP NEWKEY0.280.246.90%ThursdayBTO
PPG INDS INCPPG1.311.310.85%ThursdayBTO
DOVER CORPDOV0.60.52-15.48%ThursdayBTO
CITIZENS FIN GPCFG0.510.413.77%ThursdayBTO
TRAVELERS COSTRV2.382.3321.67%ThursdayBTO
BANK OF NY MELLBK0.80.74-1.28%ThursdayBTO
PEOPLES UTD FINPBCT0.220.210.00%ThursdayBTO
SNAP-ON INCSNA2.342.162.49%ThursdayBTO
ALLIANCE DATAADS3.653.630.91%ThursdayBTO
NUCOR CORPNUE1.130.2247.06%ThursdayBTO
SCORPIO BULKERSSALT-0.21-1.12-16.00%ThursdayBTO
MGIC INVSTMT CPMTG0.240.1927.27%ThursdayBTO
HOME BANCSHARESHOMB0.320.296.06%ThursdayBTO
S&T BANCORP INCSTBA0.530.46-5.56%ThursdayBTO
LAWSON PRODUCTSLAWS0.10.12-6.25%ThursdayBTO
BLACKSTONE GRPBX0.690.317.94%ThursdayBTO
SONOCO PRODUCTSSON0.590.65-1.59%ThursdayBTO
IMAX CORPIMAX0.040.148.33%ThursdayBTO
JANUS CAP GRPJNS0.210.19-16.67%ThursdayBTO
GATX CORPGATX1.081.628.57%ThursdayBTO
SUNCOKE ENERGYSXCP0.260.64-24.27%ThursdayBTO
ABB LTD-ADRABB0.240.2322.22%ThursdayBTO
KCG HOLDINGSKCG0.010.41-385.71%ThursdayBTO
SUNCOKE ENERGYSXC-0.10.05-40.91%ThursdayBTO
CELESTICA INCCLS0.220.221.43%ThursdayBTO
DATAWATCH CORPDWCH-0.07-0.23-50.00%ThursdayBTO
NEUROMETRIX INCNURO-0.49-1.0230.67%ThursdayBTO
CONTROLADORA VLVLRS-0.240.3464.29%ThursdayBTO
VISA INC-AV0.790.6810.26%ThursdayAMC
MATTEL INCMAT-0.17-0.13-26.76%ThursdayAMC
E TRADE FINL CPETFC0.390.432.38%ThursdayAMC
GLACIER BANCORPGBCI0.410.380.00%ThursdayAMC
WESTERN ALLIANCWAL0.690.62.94%ThursdayAMC
FCB FINL HLDGSFCB0.630.530.00%ThursdayAMC
FIRST FIN BC-OHFFBC0.350.322.70%ThursdayAMC
NCR CORP-NEWNCR0.460.383.88%ThursdayAMC
QCR HLDGS INCQCRH0.630.523.23%ThursdayAMC
ASSOC BANC CORPASB0.310.276.25%ThursdayAMC
MAXIM INTG PDTSMXIM0.520.416.98%ThursdayAMC
EASTGROUP PPTYSEGP0.980.910.93%ThursdayAMC
HAWAIIAN HLDGSHA0.850.8-1.54%ThursdayAMC
PROOFPOINT INCPFPT-0.35-0.54-26.92%ThursdayAMC
BASIC EGY SVCSBAS-0.86-99.99-7.27%ThursdayAMC
BRIGGS & STRATTBGG0.810.820.69%ThursdayAMC
TRISTATE CP HLDTSC0.240.2117.39%ThursdayAMC
CLEARWATER PAPRCLW0.691.07-3.53%ThursdayAMC
ELECTRN IMAGINGEFII0.050.0459.26%ThursdayAMC
MANHATTAN ASOCMANH0.340.387.69%ThursdayAMC
EQUITY BANCSHRSEQBK0.290.41562.50%ThursdayAMC
INDEP BK MASSINDB0.710.722.70%ThursdayAMC
NATIONAL BK HLDNBHC0.240.2356.52%ThursdayAMC
WERNER ENTRPRSWERN0.210.2815.38%ThursdayAMC
SANDY SPRINGSASR0.540.451.85%ThursdayN/A
GRUPO AEROP-ADSOMABN/A0.4214.29%ThursdayN/A
SUNTRUST BKSSTI0.840.842.27%FridayBTO
STANLEY B&D INCSWK1.191.321.79%FridayBTO
HONEYWELL INTLHON1.621.530.00%FridayBTO
KANSAS CITY SOUKSU1.161.03-4.27%FridayBTO
ROCKWELL COLLINCOL1.311.34.35%FridayBTO
GENL ELECTRICGE0.170.210.00%FridayBTO
INTERPUBLIC GRPIPG0.02013.64%FridayBTO
NEXTERA ENERGYNEE1.551.55-6.20%FridayBTO
SCHLUMBERGER LTSLB0.260.40.00%FridayBTO
STEVEN MADDENSHOO0.440.330.00%FridayBTO
WABCO HOLDINGSWBC1.441.372.08%FridayBTO
WEBSTER FINL CPWBS0.570.519.09%FridayBTO
GENTEX CORPGNTX0.310.28-3.12%FridayBTO
MANPOWER INC WIMAN1.10.985.88%FridayBTO
NEXTERA ENERGYNEP0.410.14145.95%FridayBTO
SOUTH STATE CPSSB1.131.040.00%FridayBTO
CAPITAL BNK FINCBF0.440.382.33%FridayBTO
AMERIS BANCORPABCB0.60.510.71%FridayBTO
TECNOGLASS INCTGLS0.110.17-21.05%FridayAMC



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