Q1 Earnings Season Ramps Up
Earnings results from the big banks highlight the benefits of diverse revenue streams, with JPMorgan (JPM) and Citigroup (C) offsetting decelerating loan growth trends with gains from their investment banking businesses. Wells Fargo (WFC) 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.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>
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 CORP | MTB | 1.94 | 1.87 | -0.99% | Monday | BTO |
NETFLIX INC | NFLX | 0.38 | 0.06 | 15.38% | Monday | AMC |
UNITED CONT HLD | UAL | 0.35 | 1.23 | 7.88% | Monday | AMC |
EQUITY LIFESTYL | ELS | 0.98 | 0.92 | 1.25% | Monday | AMC |
FIRST DEFIANCE | FDEF | 0.74 | 0.78 | 6.58% | Monday | AMC |
CONSOL TOMOKA | CTO | 1.91 | 0.25 | -62.66% | Monday | AMC |
SERVISFIRST BCS | SFBS | 0.4 | 0.33 | 14.29% | Monday | AMC |
CELANESE CP-A | CE | 1.71 | 1.83 | 0.66% | Monday | AMC |
BARRACUDA NTWRK | CUDA | 0.05 | 0.07 | 100.00% | Monday | AMC |
BROWN & BROWN | BRO | 0.42 | 0.44 | 2.44% | Monday | AMC |
PINNACLE FIN PT | PNFP | 0.76 | 0.71 | 0.00% | Monday | AMC |
REEDS INC | REED | -0.01 | -0.12 | 50.00% | Monday | AMC |
Yahoo Inc | YHOO | 0.08 | 0.1 | 4.40% | Monday | N/A |
REGIONS FINL CP | RF | 0.22 | 0.2 | 4.55% | Tuesday | BTO |
UNITEDHEALTH GP | UNH | 2.18 | 1.81 | 1.93% | Tuesday | BTO |
BANK OF AMER CP | BAC | 0.35 | 0.21 | 5.26% | Tuesday | BTO |
HARLEY-DAVIDSON | HOG | 0.99 | 1.36 | -15.63% | Tuesday | BTO |
PROLOGIS INC | PLD | 0.63 | 0.61 | 0.00% | Tuesday | BTO |
COMERICA INC | CMA | 1.01 | 0.34 | 4.21% | Tuesday | BTO |
JOHNSON & JOHNS | JNJ | 1.77 | 1.68 | 1.28% | Tuesday | BTO |
SCHWAB(CHAS) | SCHW | 0.37 | 0.29 | 0.00% | Tuesday | BTO |
GRAINGER W W | GWW | 3.01 | 3.18 | 3.81% | Tuesday | BTO |
GOLDMAN SACHS | GS | 5.38 | 2.68 | 6.72% | Tuesday | BTO |
OMNICOM GRP | OMC | 0.96 | 0.9 | 1.38% | Tuesday | BTO |
MERCANTILE BANK | MBWM | 0.43 | 0.52 | 6.52% | Tuesday | BTO |
SYNOVUS FINL CP | SNV | 0.51 | 0.43 | 1.89% | Tuesday | BTO |
LINCOLN ELECTRC | LECO | 0.78 | 0.76 | 0.00% | Tuesday | BTO |
HANMI FINL CP | HAFC | 0.44 | 0.46 | 9.52% | Tuesday | BTO |
TILE SHOP HLDGS | TTS | 0.14 | 0.14 | -22.22% | Tuesday | BTO |
GNC HOLDINGS | GNC | 0.33 | 0.69 | -81.08% | Tuesday | BTO |
LAM RESEARCH | LRCX | 2.54 | 1.18 | 2.28% | Tuesday | AMC |
NAVIENT CORP | NAVI | 0.43 | 0.43 | -2.27% | Tuesday | AMC |
INTL BUS MACH | IBM | 2.34 | 2.35 | 2.45% | Tuesday | AMC |
INTUITIVE SURG | ISRG | 3.97 | 3.67 | 0.76% | Tuesday | AMC |
HANCOCK HLDG CO | HBHC | 0.57 | 0.09 | 4.92% | Tuesday | AMC |
FULTON FINL | FULT | 0.23 | 0.22 | 0.00% | Tuesday | AMC |
WESBANCO INC | WSBC | 0.6 | 0.6 | 1.72% | Tuesday | AMC |
PZENA INVESTMNT | PZN | 0.13 | 0.09 | 7.14% | Tuesday | AMC |
UNIVL FST PRODS | UFPI | 1.03 | 0.95 | -6.85% | Tuesday | AMC |
WINTRUST FINL | WTFC | 0.91 | 0.9 | 4.44% | Tuesday | AMC |
CALAMP CORP | CAMP | 0.23 | 0.27 | -14.29% | Tuesday | AMC |
LEGACY TX FINL | LTXB | 0.58 | 0.43 | -3.57% | Tuesday | AMC |
ADTRAN INC | ADTN | 0.13 | 0.11 | 60.00% | Tuesday | AMC |
EAGLE BCP INC | EGBN | 0.73 | 0.68 | 5.63% | Tuesday | AMC |
FIRST CT BANCRP | FBNK | 0.24 | 0.23 | 8.00% | Tuesday | AMC |
HOPE BANCORP | HOPE | 0.32 | 0.31 | -6.06% | Tuesday | AMC |
INTERACTIVE BRK | IBKR | 0.39 | 0.51 | -78.13% | Tuesday | AMC |
ROGERS COMM CLB | RCI | 0.43 | 0.35 | 0.00% | Tuesday | AMC |
HUNTINGTON BANC | HBAN | 0.22 | 0.2 | 9.09% | Wednesday | BTO |
US BANCORP | USB | 0.8 | 0.76 | 1.23% | Wednesday | BTO |
TEXTRON INC | TXT | 0.46 | 0.55 | -8.05% | Wednesday | BTO |
BLACKROCK INC | BLK | 4.93 | 4.25 | 2.39% | Wednesday | BTO |
MORGAN STANLEY | MS | 0.9 | 0.55 | 24.62% | Wednesday | BTO |
GENUINE PARTS | GPC | 1.05 | 1.05 | 0.99% | Wednesday | BTO |
ABBOTT LABS | ABT | 0.43 | 0.41 | 1.56% | Wednesday | BTO |
SIGNATURE BANK | SBNY | 2.1 | 1.96 | 0.96% | Wednesday | BTO |
LITHIA MOTORS | LAD | 1.77 | 1.55 | -0.53% | Wednesday | BTO |
ASML HOLDING NV | ASML | 0.99 | 0.51 | 25.47% | Wednesday | BTO |
UNION BANKSHARS | UBSH | 0.43 | 0.38 | 6.67% | Wednesday | BTO |
AKZO NOBEL NV | AKZOY | N/A | 0.35 | N/A | Wednesday | BTO |
CSX CORP | CSX | 0.43 | 0.37 | 0.00% | Wednesday | AMC |
UTD RENTALS INC | URI | 1.53 | 1.4 | 16.09% | Wednesday | AMC |
AMER EXPRESS CO | AXP | 1.28 | 1.45 | -7.14% | Wednesday | AMC |
SL GREEN REALTY | SLG | 1.57 | 1.85 | -0.69% | Wednesday | AMC |
EBAY INC | EBAY | 0.4 | 0.41 | -6.38% | Wednesday | AMC |
TORCHMARK CORP | TMK | 1.14 | 1.08 | 3.57% | Wednesday | AMC |
QUALCOMM INC | QCOM | 1.05 | 0.89 | 0.00% | Wednesday | AMC |
TEXAS CAP BCSHS | TCBI | 0.88 | 0.49 | 5.49% | Wednesday | AMC |
PREFERRED BANK | PFBC | 0.7 | 0.56 | 7.58% | Wednesday | AMC |
SEI INVESTMENTS | SEIC | 0.52 | 0.46 | 7.84% | Wednesday | AMC |
EXPONENT INC | EXPO | 0.46 | 0.4 | 14.71% | Wednesday | AMC |
SIMMONS FIRST A | SFNC | 0.81 | 0.77 | 9.64% | Wednesday | AMC |
LASALLE HTL PRP | LHO | 0.43 | 0.49 | -1.59% | Wednesday | AMC |
EAST WEST BC | EWBC | 0.75 | 0.74 | 7.04% | Wednesday | AMC |
BRANDYWINE RT | BDN | 0.32 | 0.31 | 6.06% | Wednesday | AMC |
BANCORPSOUTH | BXS | 0.38 | 0.39 | 8.11% | Wednesday | AMC |
CROWN HLDGS INC | CCK | 0.7 | 0.69 | 0.00% | Wednesday | AMC |
SELECT COMFORT | SCSS | 0.45 | 0.27 | -21.88% | Wednesday | AMC |
PTC INC | PTC | 0.16 | 0.11 | -33.33% | Wednesday | AMC |
SLM CORP | SLM | 0.15 | 0.14 | 0.00% | Wednesday | AMC |
STEEL DYNAMICS | STLD | 0.79 | 0.26 | 0.00% | Wednesday | AMC |
TRIUMPH BANCORP | TBK | 0.37 | 0.27 | -15.38% | Wednesday | AMC |
WOODWARD INC | WWD | 0.67 | 0.65 | 46.00% | Wednesday | AMC |
CYS INVESTMENTS | CYS | 0.26 | 0.19 | 0.00% | Wednesday | AMC |
PLEXUS CORP | PLXS | 0.76 | 0.55 | 7.89% | Wednesday | AMC |
CATHAY GENL BCP | CATY | 0.61 | 0.57 | -1.64% | Wednesday | AMC |
COHEN&STRS INC | CNS | 0.47 | 0.42 | 0.00% | Wednesday | AMC |
HNI CORP | HNI | 0.22 | 0.31 | -3.53% | Wednesday | AMC |
RLI CORP | RLI | 0.48 | 0.54 | 19.15% | Wednesday | AMC |
BENCHMARK ELETR | BHE | 0.26 | 0.26 | 9.76% | Wednesday | AMC |
IDEX CORP | IEX | 0.93 | 0.89 | 3.23% | Wednesday | AMC |
CDN PAC RLWY | CP | 1.9 | 1.82 | -3.80% | Wednesday | AMC |
HEXCEL CORP | HXL | 0.63 | 0.59 | 3.23% | Wednesday | AMC |
CORE LABS NV | CLB | 0.39 | 0.37 | 0.00% | Wednesday | AMC |
UMPQUA HLDGS CP | UMPQ | 0.26 | 0.29 | -10.00% | Wednesday | AMC |
BADGER METER | BMI | 0.26 | 0.28 | -8.70% | Wednesday | AMC |
KAISER ALUMINUM | KALU | 1.12 | 1.51 | 4.10% | Wednesday | AMC |
VALMONT INDS | VMI | 1.62 | 1.49 | 8.78% | Wednesday | N/A |
TD AMERITRADE | AMTD | 0.41 | 0.38 | 0.00% | Wednesday | N/A |
QUEST DIAGNOSTC | DGX | 1.18 | 1.12 | 3.15% | Thursday | BTO |
DANAHER CORP | DHR | 0.84 | 1.08 | 1.94% | Thursday | BTO |
SHERWIN WILLIAM | SHW | 2.07 | 1.81 | 5.41% | Thursday | BTO |
D R HORTON INC | DHI | 0.59 | 0.52 | 17.02% | Thursday | BTO |
VERIZON COMM | VZ | 0.98 | 1.06 | -3.37% | Thursday | BTO |
BB&T CORP | BBT | 0.7 | 0.69 | 0.00% | Thursday | BTO |
KEYCORP NEW | KEY | 0.28 | 0.24 | 6.90% | Thursday | BTO |
PPG INDS INC | PPG | 1.31 | 1.31 | 0.85% | Thursday | BTO |
DOVER CORP | DOV | 0.6 | 0.52 | -15.48% | Thursday | BTO |
CITIZENS FIN GP | CFG | 0.51 | 0.41 | 3.77% | Thursday | BTO |
TRAVELERS COS | TRV | 2.38 | 2.33 | 21.67% | Thursday | BTO |
BANK OF NY MELL | BK | 0.8 | 0.74 | -1.28% | Thursday | BTO |
PEOPLES UTD FIN | PBCT | 0.22 | 0.21 | 0.00% | Thursday | BTO |
SNAP-ON INC | SNA | 2.34 | 2.16 | 2.49% | Thursday | BTO |
ALLIANCE DATA | ADS | 3.65 | 3.63 | 0.91% | Thursday | BTO |
NUCOR CORP | NUE | 1.13 | 0.22 | 47.06% | Thursday | BTO |
SCORPIO BULKERS | SALT | -0.21 | -1.12 | -16.00% | Thursday | BTO |
MGIC INVSTMT CP | MTG | 0.24 | 0.19 | 27.27% | Thursday | BTO |
HOME BANCSHARES | HOMB | 0.32 | 0.29 | 6.06% | Thursday | BTO |
S&T BANCORP INC | STBA | 0.53 | 0.46 | -5.56% | Thursday | BTO |
LAWSON PRODUCTS | LAWS | 0.1 | 0.12 | -6.25% | Thursday | BTO |
BLACKSTONE GRP | BX | 0.69 | 0.31 | 7.94% | Thursday | BTO |
SONOCO PRODUCTS | SON | 0.59 | 0.65 | -1.59% | Thursday | BTO |
IMAX CORP | IMAX | 0.04 | 0.14 | 8.33% | Thursday | BTO |
JANUS CAP GRP | JNS | 0.21 | 0.19 | -16.67% | Thursday | BTO |
GATX CORP | GATX | 1.08 | 1.62 | 8.57% | Thursday | BTO |
SUNCOKE ENERGY | SXCP | 0.26 | 0.64 | -24.27% | Thursday | BTO |
ABB LTD-ADR | ABB | 0.24 | 0.23 | 22.22% | Thursday | BTO |
KCG HOLDINGS | KCG | 0.01 | 0.41 | -385.71% | Thursday | BTO |
SUNCOKE ENERGY | SXC | -0.1 | 0.05 | -40.91% | Thursday | BTO |
CELESTICA INC | CLS | 0.22 | 0.2 | 21.43% | Thursday | BTO |
DATAWATCH CORP | DWCH | -0.07 | -0.23 | -50.00% | Thursday | BTO |
NEUROMETRIX INC | NURO | -0.49 | -1.02 | 30.67% | Thursday | BTO |
CONTROLADORA VL | VLRS | -0.24 | 0.34 | 64.29% | Thursday | BTO |
VISA INC-A | V | 0.79 | 0.68 | 10.26% | Thursday | AMC |
MATTEL INC | MAT | -0.17 | -0.13 | -26.76% | Thursday | AMC |
E TRADE FINL CP | ETFC | 0.39 | 0.43 | 2.38% | Thursday | AMC |
GLACIER BANCORP | GBCI | 0.41 | 0.38 | 0.00% | Thursday | AMC |
WESTERN ALLIANC | WAL | 0.69 | 0.6 | 2.94% | Thursday | AMC |
FCB FINL HLDGS | FCB | 0.63 | 0.53 | 0.00% | Thursday | AMC |
FIRST FIN BC-OH | FFBC | 0.35 | 0.32 | 2.70% | Thursday | AMC |
NCR CORP-NEW | NCR | 0.46 | 0.38 | 3.88% | Thursday | AMC |
QCR HLDGS INC | QCRH | 0.63 | 0.52 | 3.23% | Thursday | AMC |
ASSOC BANC CORP | ASB | 0.31 | 0.27 | 6.25% | Thursday | AMC |
MAXIM INTG PDTS | MXIM | 0.52 | 0.41 | 6.98% | Thursday | AMC |
EASTGROUP PPTYS | EGP | 0.98 | 0.91 | 0.93% | Thursday | AMC |
HAWAIIAN HLDGS | HA | 0.85 | 0.8 | -1.54% | Thursday | AMC |
PROOFPOINT INC | PFPT | -0.35 | -0.54 | -26.92% | Thursday | AMC |
BASIC EGY SVCS | BAS | -0.86 | -99.99 | -7.27% | Thursday | AMC |
BRIGGS & STRATT | BGG | 0.81 | 0.8 | 20.69% | Thursday | AMC |
TRISTATE CP HLD | TSC | 0.24 | 0.21 | 17.39% | Thursday | AMC |
CLEARWATER PAPR | CLW | 0.69 | 1.07 | -3.53% | Thursday | AMC |
ELECTRN IMAGING | EFII | 0.05 | 0.04 | 59.26% | Thursday | AMC |
MANHATTAN ASOC | MANH | 0.34 | 0.38 | 7.69% | Thursday | AMC |
EQUITY BANCSHRS | EQBK | 0.29 | 0.41 | 562.50% | Thursday | AMC |
INDEP BK MASS | INDB | 0.71 | 0.72 | 2.70% | Thursday | AMC |
NATIONAL BK HLD | NBHC | 0.24 | 0.23 | 56.52% | Thursday | AMC |
WERNER ENTRPRS | WERN | 0.21 | 0.28 | 15.38% | Thursday | AMC |
SANDY SPRING | SASR | 0.54 | 0.45 | 1.85% | Thursday | N/A |
GRUPO AEROP-ADS | OMAB | N/A | 0.42 | 14.29% | Thursday | N/A |
SUNTRUST BKS | STI | 0.84 | 0.84 | 2.27% | Friday | BTO |
STANLEY B&D INC | SWK | 1.19 | 1.32 | 1.79% | Friday | BTO |
HONEYWELL INTL | HON | 1.62 | 1.53 | 0.00% | Friday | BTO |
KANSAS CITY SOU | KSU | 1.16 | 1.03 | -4.27% | Friday | BTO |
ROCKWELL COLLIN | COL | 1.31 | 1.3 | 4.35% | Friday | BTO |
GENL ELECTRIC | GE | 0.17 | 0.21 | 0.00% | Friday | BTO |
INTERPUBLIC GRP | IPG | 0.02 | 0 | 13.64% | Friday | BTO |
NEXTERA ENERGY | NEE | 1.55 | 1.55 | -6.20% | Friday | BTO |
SCHLUMBERGER LT | SLB | 0.26 | 0.4 | 0.00% | Friday | BTO |
STEVEN MADDEN | SHOO | 0.44 | 0.33 | 0.00% | Friday | BTO |
WABCO HOLDINGS | WBC | 1.44 | 1.37 | 2.08% | Friday | BTO |
WEBSTER FINL CP | WBS | 0.57 | 0.51 | 9.09% | Friday | BTO |
GENTEX CORP | GNTX | 0.31 | 0.28 | -3.12% | Friday | BTO |
MANPOWER INC WI | MAN | 1.1 | 0.98 | 5.88% | Friday | BTO |
NEXTERA ENERGY | NEP | 0.41 | 0.14 | 145.95% | Friday | BTO |
SOUTH STATE CP | SSB | 1.13 | 1.04 | 0.00% | Friday | BTO |
CAPITAL BNK FIN | CBF | 0.44 | 0.38 | 2.33% | Friday | BTO |
AMERIS BANCORP | ABCB | 0.6 | 0.5 | 10.71% | Friday | BTO |
TECNOGLASS INC | TGLS | 0.11 | 0.17 | -21.05% | Friday | AMC |
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Wells Fargo & Company (WFC): Free Stock Analysis Report
J P Morgan Chase & Co (JPM): Free Stock Analysis Report
Citigroup Inc. (C): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
