Bank Stocks Kick Of Q3 Earnings Season With A Bang

By: Wayne Duggan

Big U.S. bank stocks reported impressive numbers in the opening week of Q3 earnings season. Banks have set the table for what could be a reassuring quarter for U.S. investors. Here’s a recap of bank earnings, an overview of S&P 500 earnings trends after 1 week of reporting and a breakdown of what investors might expect in coming weeks.

Bank Earnings Impress
Bank of America (NYSE: BAC) was one of the biggest winners of the first week of earnings reports. The bank reported earnings per share of 85 cents and revenue of $22.9 billion. Both numbers exceeded consensus analyst estimates of 71 cents and $22 billion, respectively.

Goldman Sachs (NYSE: GS) also reported big Q3 numbers driven by an 88% increase in investment banking revenue. Goldman reported $14.93 in adjusted EPS, beating analyst estimates by 46%. Revenue of $13.61 billion also far surpassed analyst expectations of $11.68 billion.

Citigroup Inc. (NYSE: C), Wells Fargo & Co. (NYSE: WFC), JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS) also beat analyst estimates for Q3 earnings. In all, 13 S&P 500 financial sector stocks reported earnings last week, and 85% of those companies reported both earnings and revenue beats for the quarter. On average, financial sector earnings have beaten consensus analyst expectations so far by about 13%.

Hot Start to Earnings Season
Bank earnings dominated the first week of earnings season, but plenty of other companies reported as well. In fact, a total of 41 S&P 500 companies reported earnings last week, and roughly 2/3 of them (66%) have beaten analyst estimates on both revenue and earnings. These 41 companies have reported Q3 earnings that are 14.7% above consensus estimates so far.

Analysts are expecting these strong growth trends to continue throughout the remainder of the Q3 earnings season. Analysts are projecting S&P 500 earnings will grow 30% in Q3, while sales increased 15.1% compared to a year ago.

What To Watch
Strong bank earnings are a bullish signal about the health of the U.S. economy, but investors still have plenty of unanswered questions that may be addressed in coming weeks as earnings season rolls on.

Through the first week of earnings season, it’s clear consumer demand in the Q3 was relatively strong. Unfortunately, supply chain disruptions and inflation seem to be pressuring profit margins. Only about 8% of S&P 500 components have reported earnings so far, but net margins are currently tracking about 0.1% below consensus estimates, according to Bank of America. Most companies have said they expect supply chain disruptions to be a temporary phenomenon, but the duration and severity of these disruptions are creating uncertainty for investors. The degree to which disruptions negatively impact Q4 and 2022 guidance could have a major impact on stock prices in the near term.

Finally, the majority of S&P 500 companies that reported in the first week of earnings season have domestic-centered businesses. Upcoming earnings reports from U.S. multinational companies, particularly those with high exposure to China, should give investors a much clearer picture of the health of the global economy.

Active Trading with Lightspeed
Lightspeed provides professional traders with all the tools required to help them find success in stock trading, and we have been developing and honing our active trader platform to offer an optimal user experience. With the intuitive interface layouts and institutional quality stock and options scanners, we aim to help traders reach their goals, no matter what their strategy is. We also offer our clients some of the lowest trading fees in the industry.

For more information on a professional trading platform with Lightspeed, please call us at 1-888-577-3123, request a demo, or to open an account.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

You may also be interested in...

The IPOX® Week, November 29th, 2021
Read More
The IPOX® Week, November 22nd, 2021
Read More
The IPOX® Week, November 15th, 2021
Read More
The IPOX® Week, November 8th, 2021
Read More

Try the demo

Compare Platforms
Check the background of this firm on FINRA's BrokerCheck

Our website uses cookies to improve the performance of our site, to analyze the traffic to our site, and to personalize your experience of the site. You can control cookies through your browser settings. Please find more information on the cookies used on our site in our Privacy Policy. By clicking OK, you agree to allow us to collect information through cookies.

OK