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Zacks Earnings Trends Highlights: JPMorgan, Citigroup, Wells Fargo, Meta and Nvidia
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For Immediate Release
Chicago, IL – April 10, 2024– Zacks Director of Research Sheraz Mian says, "For the Finance sector, total Q1 earnings are expected to be up +3.3% on +2.4% higher revenues. This would follow the sector's +12.4% earnings growth on +8.4% higher revenues in 2023 Q4."
2024 Q1 Earnings Season Gets Underway
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:
Total S&P 500 earnings for the first quarter of 2024 are expected to be up +2.2% from the same period last year on +3.4% higher revenues. This follows the +6.8% earnings growth on +3.9% higher revenues in 2023 Q4.
As was the case in the preceding two quarters, the Tech sector remains a key growth driver in 2024 Q1. Had it not been for the robust Tech sector earnings growth, total earnings for the rest of the index would be modestly in negative territory.
For the Finance sector, total Q1 earnings are expected to be up +3.3% on +2.4% higher revenues. This would follow the sector's +12.4% earnings growth on +8.4% higher revenues in 2023 Q4.
For 2024 Q1, 'Magnificent 7' earnings are expected to increase +33.0% on +13.0% higher revenues. Excluding the Mag 7 contribution, 2024 Q1 earnings for the rest of the index would be down -3.5% from the year-earlier period (vs. +2.2% growth otherwise).
The March-quarter reporting cycle will really get going once JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) release their results on Friday. However, early results from companies with fiscal quarters ending in February have been coming out in recent days. Through April 9th, we have seen such early Q1 results from 20 S&P 500 members.
These early results appear to reconfirm the trends we have been seeing in recent quarters, with growth modestly accelerating and positive surprises relatively hard to come by. Overall, there are no major surprises at this early stage in the reporting cycle.
JPMorgan, Citigroup, and Wells Fargo are part of the Finance sector, whose Q1 earnings are expected to be up +3.3% from the same period last year on +2.4% higher revenues. This would follow the sector's +12.4% earnings growth on +8.4% higher revenues in 2023 Q4.
Finance sector earnings estimates have largely remained stable since the quarter got underway, as we can see in the revisions trend for JPMorgan and Wells Fargo. Citigroup estimates have modestly come down, reflecting recent management commentary about higher costs.
The outlook for the core net interest income part of the business has modestly improved as the quarter progressed, with the continued growth in loan portfolios offsetting the modest margin squeeze. The stable to improving macro backdrop, as reflected in the positive stock-market momentum coupled with expectations of Fed easing going forward, has the potential to surprise us to the upside here, particularly concerning loan volume.
Beyond the core commercial banking business, we have been hearing about 'green shoots' on the M&A side for some time now, though the actual numbers on that front will be flat to modestly down in Q1. We will most likely see the same with respect to trading activities as well. The one relatively bright spot on the investment banking side has been on the equity and debt capital markets, and we will see good growth numbers from those businesses.
All in all, bank earnings should be good enough; not great, but not bad either, given the seemingly higher-for-longer Fed outlook.
Looking past the banks, total Q1 earnings for the S&P 500 index are expected to be up +2.2% from the same period last year on +3.4% higher revenues.
Earnings growth turned positive in the 2023 Q3 after remaining modestly in negative territory for the three quarters before that period. Two notable developments helped push the aggregate growth picture into positive territory – the Tech sector resumed its traditional growth-driver status, and net margins turned positive.
Expectations for 2024 Q1 and beyond show that the Tech sector is expected to remain a core growth driver, and the margin outlook will continue to improve.
Please note that the magnitude of negative revisions to Q1 estimates compared favorably to what we had seen in the comparable period for 2023 Q4.
Since the start of Q1, estimates came down for 9 of the 16 Zacks sectors. The sectors suffering the biggest estimate cuts include Energy, Basic Materials, Transportation, Autos, and Aerospace.
On the positive side, estimates have been raised for 6 of the 16 Zacks sectors since the quarter got underway, with the Retail, Tech, and Utilities sectors enjoying notable positive revisions.
The revisions trend noted here for 2024 Q1 also represents what's happening to full-year 2024 estimates. While estimates in the aggregate are coming down, several major sectors, including the Tech sector, are still enjoying positive estimate revisions.
This favorable earnings outlook for the Tech sector should reassure us all of the fundamental underpinnings of the group's stock-market momentum.
For the Tech sector as a whole, 2024 Q1 earnings are expected to be up +19.4% on +8.3% higher revenues. This would follow the sector's +27.5% higher earnings in 2023 Q4 on +8.8% revenue growth. A big part of the Tech sector's strong Q1 earnings growth and the group's favorable revisions trend is due to the 'Mag 7' members, not all of whom are part of our Tech sector.
Take, for example, Meta (META - Free Report) and Nvidia (NVDA - Free Report) , whose Q1 earnings are expected to be up +58.8% and +487.5% from the year-earlier period, respectively. Excluding contributions from Meta and Nivida, Q1 earnings for the Tech sector would only increase by +7.0% instead of the +19.4% growth otherwise.
We also see an improving earnings outlook for Meta and Nvidia, with estimates steadily increasing. For example, the current 2024 Zacks Consensus EPS for Meta of $19.94 is up +13.6% over the last three months. The consensus EPS estimate for Nvidia has increased +20.6% over the same time period.
A big part of this year's earnings growth is expected to come from margins reversing last year's declines and starting to expand again. The expectation is that aggregate net margins this year get back to the 2022 level, with the Tech sector driving most of the gains.
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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, Citigroup, Wells Fargo, Meta and Nvidia
For Immediate Release
Chicago, IL – April 10, 2024– Zacks Director of Research Sheraz Mian says, "For the Finance sector, total Q1 earnings are expected to be up +3.3% on +2.4% higher revenues. This would follow the sector's +12.4% earnings growth on +8.4% higher revenues in 2023 Q4."
2024 Q1 Earnings Season Gets Underway
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 March-quarter reporting cycle will really get going once JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) release their results on Friday. However, early results from companies with fiscal quarters ending in February have been coming out in recent days. Through April 9th, we have seen such early Q1 results from 20 S&P 500 members.
These early results appear to reconfirm the trends we have been seeing in recent quarters, with growth modestly accelerating and positive surprises relatively hard to come by. Overall, there are no major surprises at this early stage in the reporting cycle.
JPMorgan, Citigroup, and Wells Fargo are part of the Finance sector, whose Q1 earnings are expected to be up +3.3% from the same period last year on +2.4% higher revenues. This would follow the sector's +12.4% earnings growth on +8.4% higher revenues in 2023 Q4.
Finance sector earnings estimates have largely remained stable since the quarter got underway, as we can see in the revisions trend for JPMorgan and Wells Fargo. Citigroup estimates have modestly come down, reflecting recent management commentary about higher costs.
The outlook for the core net interest income part of the business has modestly improved as the quarter progressed, with the continued growth in loan portfolios offsetting the modest margin squeeze. The stable to improving macro backdrop, as reflected in the positive stock-market momentum coupled with expectations of Fed easing going forward, has the potential to surprise us to the upside here, particularly concerning loan volume.
Beyond the core commercial banking business, we have been hearing about 'green shoots' on the M&A side for some time now, though the actual numbers on that front will be flat to modestly down in Q1. We will most likely see the same with respect to trading activities as well. The one relatively bright spot on the investment banking side has been on the equity and debt capital markets, and we will see good growth numbers from those businesses.
All in all, bank earnings should be good enough; not great, but not bad either, given the seemingly higher-for-longer Fed outlook.
Looking past the banks, total Q1 earnings for the S&P 500 index are expected to be up +2.2% from the same period last year on +3.4% higher revenues.
Earnings growth turned positive in the 2023 Q3 after remaining modestly in negative territory for the three quarters before that period. Two notable developments helped push the aggregate growth picture into positive territory – the Tech sector resumed its traditional growth-driver status, and net margins turned positive.
Expectations for 2024 Q1 and beyond show that the Tech sector is expected to remain a core growth driver, and the margin outlook will continue to improve.
Please note that the magnitude of negative revisions to Q1 estimates compared favorably to what we had seen in the comparable period for 2023 Q4.
Since the start of Q1, estimates came down for 9 of the 16 Zacks sectors. The sectors suffering the biggest estimate cuts include Energy, Basic Materials, Transportation, Autos, and Aerospace.
On the positive side, estimates have been raised for 6 of the 16 Zacks sectors since the quarter got underway, with the Retail, Tech, and Utilities sectors enjoying notable positive revisions.
The revisions trend noted here for 2024 Q1 also represents what's happening to full-year 2024 estimates. While estimates in the aggregate are coming down, several major sectors, including the Tech sector, are still enjoying positive estimate revisions.
This favorable earnings outlook for the Tech sector should reassure us all of the fundamental underpinnings of the group's stock-market momentum.
For the Tech sector as a whole, 2024 Q1 earnings are expected to be up +19.4% on +8.3% higher revenues. This would follow the sector's +27.5% higher earnings in 2023 Q4 on +8.8% revenue growth. A big part of the Tech sector's strong Q1 earnings growth and the group's favorable revisions trend is due to the 'Mag 7' members, not all of whom are part of our Tech sector.
Take, for example, Meta (META - Free Report) and Nvidia (NVDA - Free Report) , whose Q1 earnings are expected to be up +58.8% and +487.5% from the year-earlier period, respectively. Excluding contributions from Meta and Nivida, Q1 earnings for the Tech sector would only increase by +7.0% instead of the +19.4% growth otherwise.
We also see an improving earnings outlook for Meta and Nvidia, with estimates steadily increasing. For example, the current 2024 Zacks Consensus EPS for Meta of $19.94 is up +13.6% over the last three months. The consensus EPS estimate for Nvidia has increased +20.6% over the same time period.
A big part of this year's earnings growth is expected to come from margins reversing last year's declines and starting to expand again. The expectation is that aggregate net margins this year get back to the 2022 level, with the Tech sector driving most of the gains.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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.