Three of the major banks are reporting their fourth-quarter financial results before the markets open on Friday. In general, financial stocks have made solid gains through the end of 2016, with a tremendous tailwind from the Trump rally. Considering a recent rate hike from the Federal Reserve, with potentially more to come, this sector could just be getting started. But for now we can see if this rally is fundamentally sound.
24/7 Wall St. has put together a preview of some of the major financial companies kicking off the new earnings reporting season. Markets have been pushed to record highs in the wake of the U.S. presidential election, and these major banks reporting can set the tone for earnings going forward.
24/7 Wall St. has taken a look at all the Dow stocks and made a bullish and bearish case for each. The financial stocks had an especially strong case for 2017.
Here, we have included the consensus earnings estimates from Thomson Reuters and the stock price and trading history, as well as some additional color on each.
Keep in mind that the earnings and revenue estimates may change ahead of the formal reports, and some companies may reschedule reporting dates as well.
Bank of America
The Thomson Reuters consensus estimates on Bank of America Corp. (BAC) are calling for earnings per share (EPS) of $0.38 and $20.96 billion in revenue. The same period of last year reportedly had $0.27 in EPS and revenue of $19.56 billion.
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This bank seems to be out of the regulatory penalty box and is said to be among the best positioned of the larger banks to win off of higher interest rates ahead. It is valued at 0.95 times book value and at almost 14 times forward earnings expectations.
Shares were changing hands at $22.68 on Friday's close. The consensus analyst price target is $22.94, and the 52-week trading range is $10.99 to $23.39.
For JPMorgan Chase & Co. (JPM), the consensus forecast is $1.43 in EPS but $23.95 billion in revenue. In the same period of last year, the megabank posted EPS of had $1.32 and $23.75 billion in revenue.
Currently, the company is valued at 1.38 times book value, with a forward price-to-earnings (P/E) ratio of roughly 13.4. JPMorgan is considered one of the best banks that can benefit from Trump taking office. Not to mention that CEO Jamie Dimon is yet again considered the best major banker in America, he also just recently took over the chairman position of the Business Roundtable.
Shares closed trading at $86.12 on Friday. The consensus price target is just $84.62. The 52-week range is $52.50 to $87.76.
Wells Fargo & Co. (WFC) has consensus estimates of $1.00 in EPS and revenue of $22.47 billion. The fourth quarter of last year reportedly EPS of had $1.03 and $21.59 billion in revenue.
Wells Fargo is perhaps very welcoming of a Trump presidency, for a few reasons. First, the stock has recovered handily from its huge debacle earlier this fall, and loyal shareholders were rewarded. Second, the news flow has been absolutely transfixed on Trump winning the presidency, taking some of the heat off of Wells Fargo with former CEO Stumpf stepping down a distant memory. Also, it goes without saying but Wells Fargo will definitely benefit from the higher interest rates that are potentially on the horizon.
Shares ended the week at $55.04, in a 52-week range of $43.55 to $58.02. The consensus price target is $56.17.