Earnings season is a very important period of time for investors as well as traders. Every public company posts their quarterly performance or earnings to the public and it generally takes place in January, April, July, and October of every year. During this reporting, public companies generally cover the topics of financial performance, changes in governing bodies, legal involvements and industry changes. Earnings announcements calendar is generally released a few weeks before.
This season is a great time to analyze the current stock price and determine if the stock is overvalued or undervalued. It will also help you get the PE, PS ratio of a stock. You can also analyze the earnings before interest tax (EBIT) whereas some analysts prefer earnings before interest, taxes, depreciation, and amortization (EBITDA) which might give you a rough overview whether you need to buy, sell or hold the stock.
Major banks are expected to report earnings this Friday and the following week. FED’s announcements make a lot of impact on the financial sector and the banking industry. The Banks industry fell by 1.12\% on a quarterly basis and 3.16\% on a YTD basis. The Financial sector also failed to prevent the downfall and fell 0.95% on a quarterly basis and 3.25% on a Year to date basis. In the previous month, FED held a meeting in Vienna and announced the increment of interest rates from 1.75% to 2%. They also declared letting the inflation go up to 2% as the US economy looked stable. There were around 213000 jobs added in the month of June but the unemployment rate rose to 4% from 3.8%.
There are a few earnings report to watch out in this week are JP Morgan, Wells Fargo, and Citigroup. JP Morgan, Wells Fargo, and Citigroup have an EPS of $2.24, $1.12, and $1.57 in this quarter. All the three banks beat their quarterly earnings in their first quarter by 3.95%, 4.67%, and 4.35% respectively. JP Morgan fell 3.54% despite beating the Wall Street estimates and Citigroup also failed to fight the bullish sentiment and dived 4.36% whereas Wells Fargo Co.traded up 10.17% from the last earnings reported on 13th April.
In the coming week, the notable earnings to be reported are Bank of America, Goldman Sachs, and Morgan Stanley. Morgan Stanley was trading at $53.26 and is now trading at $47.75 down by 10.34% followed by Goldman Sachs who are trading down by 11.02%. Bank of America is trading down by 4.73%.
Most of the major banks were seen to make an unavoidable downfall despite reporting a better than expected earnings in the last quarter. If a company reports earnings that are higher than projected the price generally goes up and vice-versa. These are the key upcoming earnings report to watch in the coming days.