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Zacks Earnings Trends Highlights: JPMorgan, Bank of America, Citigroup, US Bancorp and PNC Financial
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For Immediate Release
Chicago, IL – April 20, 2023– Zacks Director of Research Sheraz Mian says, "The picture emerging at this early stage is one of resilience and stability, with an above-average proportion of companies beating estimates and providing a good-enough outlook in an uncertain macro environment."
Q1 Earnings Season Off to a Promising Start
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:
We are off to a good start to the 2023 Q1 season, with no signs yet of the long-feared earnings cliff. The picture emerging at this early stage is one of resilience and stability, with an above-average proportion of companies beating estimates and providing a good-enough outlook in an uncertain macro environment.
For the 53 S&P 500 members that have reported Q1 results, total earnings are up +2.9% on +9.3% higher revenues, with 83% beating EPS estimates and 71.7% beating revenue estimates.
This is a better performance than we have seen from this group of 53 index members in other recent periods, both in terms of the growth rates as well as the beats percentages.
Looking at Q1 as a whole, total S&P 500 earnings are now expected to be down -8.8% from the same period last year on +2.1% higher revenues. This would follow the -5.4% decline in the preceding period's earnings (2022 Q4) on +5.9% higher revenues.
Bank earnings results have proved to be much more resilient and reassuring relative to what many in the market appeared to fear. Results are not just better than feared but actually better than expected. As a result, the Finance sector's Q1 earnings are now expected to be up +7.6% from the year-earlier period, a significant improvement from the +0.3% growth expected a week ago ahead of the results.
The three most prominent players in the space – JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) – not only handily beat top- and bottom-line estimates on the back of strength in their lending businesses but also provided favorable commentary on that count for the coming periods.
JPMorgan's Q1 earnings were up an impressive +52.4% from the same period last year on +24.8% higher revenues on record net-interest income. Management raised the outlook for this key profitability measure for the rest of the year, even though they see net-interest income next year to be below the 2023 level. Q1 earnings at Bank of America were up +15.5%, though Citi's earnings were down -8.1% from the year-earlier period. Earnings estimates for the June quarter have been increasing after the releases, with the trend particularly notable for JPMorgan and Citigroup.
Many smaller regional banks have yet to report Q1 results, but the bigger regional players have largely tracked the profitability trends of the money-center players. You can see that in the Q1 results from US Bancorp (USB - Free Report) and PNC Financial (PNC - Free Report) .
We will know more as we see results from the smaller banking players, but it is increasingly becoming clear that Silicon Valley Bank's failure wasn't reflective of an industry-wide systemic problem but rather a function of idiosyncratic and company-specific factors. That said, the SVB failure and the resulting scramble for deposits has put a spotlight on industry-wide competition for deposits that will have negative implications for net-interest margins in the coming quarters.
The Earnings Big Picture
As noted earlier, the current aggregate earnings total for the index approximates to an index 'EPS' of $213.47, down from $242.98 in mid-April, 2022.
2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps there will be some more downward adjustments to estimates over the coming weeks as companies report Q1 results and provide guidance for the coming quarters. But it is factually inaccurate to claim that 2023 earnings estimates have not fallen much.
The only scenario in which the more than -14% cut to 2023 earnings estimates may be called inadequate would be if the U.S. economy were headed toward a major economic downturn. The risk of such a 'hard landing' for the U.S. economy can't be ruled out, but it is not our base case.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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, Bank of America, Citigroup, US Bancorp and PNC Financial
For Immediate Release
Chicago, IL – April 20, 2023– Zacks Director of Research Sheraz Mian says, "The picture emerging at this early stage is one of resilience and stability, with an above-average proportion of companies beating estimates and providing a good-enough outlook in an uncertain macro environment."
Q1 Earnings Season Off to a Promising Start
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:
Bank earnings results have proved to be much more resilient and reassuring relative to what many in the market appeared to fear. Results are not just better than feared but actually better than expected. As a result, the Finance sector's Q1 earnings are now expected to be up +7.6% from the year-earlier period, a significant improvement from the +0.3% growth expected a week ago ahead of the results.
The three most prominent players in the space – JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) – not only handily beat top- and bottom-line estimates on the back of strength in their lending businesses but also provided favorable commentary on that count for the coming periods.
JPMorgan's Q1 earnings were up an impressive +52.4% from the same period last year on +24.8% higher revenues on record net-interest income. Management raised the outlook for this key profitability measure for the rest of the year, even though they see net-interest income next year to be below the 2023 level. Q1 earnings at Bank of America were up +15.5%, though Citi's earnings were down -8.1% from the year-earlier period. Earnings estimates for the June quarter have been increasing after the releases, with the trend particularly notable for JPMorgan and Citigroup.
Many smaller regional banks have yet to report Q1 results, but the bigger regional players have largely tracked the profitability trends of the money-center players. You can see that in the Q1 results from US Bancorp (USB - Free Report) and PNC Financial (PNC - Free Report) .
We will know more as we see results from the smaller banking players, but it is increasingly becoming clear that Silicon Valley Bank's failure wasn't reflective of an industry-wide systemic problem but rather a function of idiosyncratic and company-specific factors. That said, the SVB failure and the resulting scramble for deposits has put a spotlight on industry-wide competition for deposits that will have negative implications for net-interest margins in the coming quarters.
The Earnings Big Picture
As noted earlier, the current aggregate earnings total for the index approximates to an index 'EPS' of $213.47, down from $242.98 in mid-April, 2022.
2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps there will be some more downward adjustments to estimates over the coming weeks as companies report Q1 results and provide guidance for the coming quarters. But it is factually inaccurate to claim that 2023 earnings estimates have not fallen much.
The only scenario in which the more than -14% cut to 2023 earnings estimates may be called inadequate would be if the U.S. economy were headed toward a major economic downturn. The risk of such a 'hard landing' for the U.S. economy can't be ruled out, but it is not our base case.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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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.