Earnings season is finally underway. The big banks – Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo Corporation (WFC) – were the first to report, and their results were mixed.
As you may recall in last Tuesday’s Market 360, I gave a preview of how the big banks were poised to do and whether they were good buys ahead of their earnings releases. So just how did the big banks’ earnings stack up? Let’s take a look…
Bank of America
Bank of America announced earnings of $0.85 per share, up 3.6% year-over-year from earnings of $0.82 per share in the same quarter of last year. Analysts expected earnings of $0.77 per share, so Bank of America posted a 10.4% earnings surprise. Revenue rose 11% year-over-year to $24.5 billion, up from $22.1 billion a year ago and slightly above analysts’ estimates.
For full-year 2022, earnings per share came in at $3.19, which was down 10.6% from $3.57 per share for full-year 2021.
Citigroup announced earnings of $1.16 per share, down 21% from earnings of $1.46 per share in the same quarter of last year. Analysts expected earnings of $1.14 per share, so the bank topped estimates by 1.8%. Revenue grew 6% year-over-year to $18.0 billion, up from $17.0 billion a year ago.
For full-year 2022, earnings per share came in at $7.00 per share, which was down from $10.14 per share in 2021.
JPMorgan Chase announced earnings of $3.57 per share, up 7.2% year-over-year from earnings of $3.33 per share in the same quarter of last year. Analysts expected earnings of $3.06 per share. Revenue rose 6% year-over-year to $11.0 billion, up from $10.4 billion a year ago.
For full-year 2022, earnings per share came in at $12.09, a 21.3% decline from $15.36 per share in 2021.
Wells Fargo Corporation
Wells Fargo announced earnings of $0.67 per share, down 46.4% year-over-year from earnings of $1.25 per share in the same quarter of last year. Analysts were calling for earnings of $0.66 per share. Revenue fell 5.7% year-over-year to $19.66 billion, down from $20.86 billion a year ago.
For full-year 2022, earnings per share came in at $3.14, a 36.6% decline from earnings of $4.95 per share for full-year 2021.
The bottom line: These were not impressive earnings for the big banks.
So, their subsequent slide in Portfolio Grader should come as no surprise either. My Portfolio Grader downgraded all but JPMorgan Chase from a Hold (C-rating) to a Sell (D-rating) over the weekend. (JPMorgan Chase’s C-rating was left unchanged after earnings.)
The big banks weren’t the only ones whose ratings were downgraded over the weekend. After taking a close look at the latest institutional buying pressure and each company’s fundamental health, I revised my Portfolio Grader recommendations for 116 blue chip stocks, and 38 were downgraded from a C-rating to a D-rating. Chances are you have at least one of these stocks in your portfolios, so you may want to give the list a skim accordingly.
I’ve listed the first 10 stocks below that were downgraded from a Hold (C-rating) to a Sell (D-rating). For the full list of the 116 stocks – as well as their Fundamental and Quantitative Grades – click here.
|Ticker||Company Name||Total Grade|
|AKAM||Akamai Technologies, Inc.||D|
|BAC||Bank of America Corp||D|
|BK||Bank of New York Mellon Corp||D|
|CHT||Chunghwa Telecom Co., Ltd Sponsored ADR||D|
Personally, I’ve never been a fan of the big banks. I used to work for a division of the government that is now part of the Federal Reserve. During my time there, I saw how they essentially “cook their books” – and that scarred me for life!
Instead, I’m pounding the table on the energy sector, and for good reason: The energy sector is forecast to report an earnings growth rate of 61.2% in the fourth quarter. Revenue is forecast to come in at 12.4%. Meanwhile, the S&P 500’s earnings are expected to decline 3.9% and for revenue to increase 3.9%.
That’s why I’m loading my Growth Investor Buy List with energy stocks. I want to ensure that we’re invested in the companies that will profit from the high energy demand and institutional buying pressure. These stocks are an oasis for investors seeking steady sales and earnings growth.
So, if you want to ensure that your portfolio is positioned to prosper this earnings season, become a member of Growth Investor today.