Stock Market News – Banking giants Citigroup and Bank of America to release quarterly earnings
January 15, 2018 4:26 pm
S&P 500 constituents Citigroup and Bank of America, the fourth- and second-largest US banks by assets, are scheduled to report their Q4 2017 results before the market open on Tuesday and Wednesday respectively. The consensus recommendation for both banks is “buy” at the moment, in line with the average consensus recommendation for the Banks peer group.
Citi’s earnings per share during Q4 are anticipated to stand at $1.19. This compares to $1.26 from five weeks ago, though still $1.19 – should it materialize – reflects roughly a 4.4% increase relative to Q4 2016 when the bank earned $1.14 per share. The most bearish analyst submitting forecasts to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) is projecting Citi’s EPS to stand at $1.14, and the most bullish is expecting them at $1.25. In the four quarters that preceded, Citi’s actual EPS managed to exceed the consensus estimate.
Should Citi’s EPS positively surprise, its stock price is expected to gain. In early December, the bank’s stock price hit $77.92, its highest since late December 2008; the area around this level could provide some resistance to upside movements in price. On the downside and should earnings disappoint, the range around the current level of the 50-day moving average at $74.26 might act as support, with the range around $75.00 which was congested in previous weeks also potentially being of significance.
Turning to Bank of America, consensus estimates currently project EPS to stand at $0.44, this being a downward revision from $0.47 from five weeks ago. Still, it favorably compares to $0.40 from the same quarter last year; +10.0%. Thomson Reuters I/B/E/S estimates for BofA EPS are currently ranging from $0.41 to $0.48. Similar to Citi, BofA has also managed to beat analysts’ projections in the four previous quarters.
If BofA yet again delivers an earnings beat, its stock price is anticipated to advance. BofA’s stock price last Friday finished the session at the decade high of $31.19. A positive earnings report could see the stock price meeting a barrier around the $32.00 mark, a potential psychological level. On the other hand, an earnings miss is expected to result to declines. In this case, the area around the $30.00 handle which was relatively congested recently, could offer some support. In both Citi’s and BofA’s case, the greater the deviation between forecasts and actual results, the sharper the stock price movements are anticipated to be.
Turning back to Citi, it is interesting to note that the bank received publicity during the crucial votes on US tax overhaul because apart from benefiting – like most other financials – from lower taxes, it would also take a hit due to a writedown in deferred tax assets relating to tax loss carry forwards recorded during the global financial crisis; lower taxes translate into lower values for those assets. Tuesday’s quarterly report is expected to include a charge related to the matter amounting to around $20 billion.
Among big names reporting quarterly results this week are investment bank Goldman Sachs and rival Morgan Stanley. They will be reporting before Wall Street’s opening bell on Wednesday and Thursday respectively. Quarterly EPS for Goldman Sachs is expected to stand at $4.90 and for Morgan Stanley at $0.77.
US banks’ bottom lines are expected to benefit throughout the year from interest rate increases delivered by the Federal Reserve, translating into higher net interest income; markets have at the moment roughly priced in two quarter percentage point rate hikes to be delivered in 2018, with the FOMC’s most recently released dot plot projecting three. Another factor having the capacity to drive financials moving forward is the prospect of deregulation. US stock markets are closed on Monday for Martin Luther King Jr. Day.
S&P 500 constituents Citigroup and Bank of America, the fourth- and second-largest US banks by assets, are scheduled to report their Q4 2017 results before the market open on Tuesday and Wednesday respectively. The consensus recommendation for both banks is “buy” at the moment, in line with the average consensus recommendation for the Banks peer group.
Citi’s earnings per share during Q4 are anticipated to stand at $1.19. This compares to $1.26 from five weeks ago, though still $1.19 – should it materialize – reflects roughly a 4.4% increase relative to Q4 2016 when the bank earned $1.14 per share. The most bearish analyst submitting forecasts to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S) is projecting Citi’s EPS to stand at $1.14, and the most bullish is expecting them at $1.25. In the four quarters that preceded, Citi’s actual EPS managed to exceed the consensus estimate.
Should Citi’s EPS positively surprise, its stock price is expected to gain. In early December, the bank’s stock price hit $77.92, its highest since late December 2008; the area around this level could provide some resistance to upside movements in price. On the downside and should earnings disappoint, the range around the current level of the 50-day moving average at $74.26 might act as support, with the range around $75.00 which was congested in previous weeks also potentially being of significance.
Turning to Bank of America, consensus estimates currently project EPS to stand at $0.44, this being a downward revision from $0.47 from five weeks ago. Still, it favorably compares to $0.40 from the same quarter last year; +10.0%. Thomson Reuters I/B/E/S estimates for BofA EPS are currently ranging from $0.41 to $0.48. Similar to Citi, BofA has also managed to beat analysts’ projections in the four previous quarters.
If BofA yet again delivers an earnings beat, its stock price is anticipated to advance. BofA’s stock price last Friday finished the session at the decade high of $31.19. A positive earnings report could see the stock price meeting a barrier around the $32.00 mark, a potential psychological level. On the other hand, an earnings miss is expected to result to declines. In this case, the area around the $30.00 handle which was relatively congested recently, could offer some support. In both Citi’s and BofA’s case, the greater the deviation between forecasts and actual results, the sharper the stock price movements are anticipated to be.
Turning back to Citi, it is interesting to note that the bank received publicity during the crucial votes on US tax overhaul because apart from benefiting – like most other financials – from lower taxes, it would also take a hit due to a writedown in deferred tax assets relating to tax loss carry forwards recorded during the global financial crisis; lower taxes translate into lower values for those assets. Tuesday’s quarterly report is expected to include a charge related to the matter amounting to around $20 billion.
Among big names reporting quarterly results this week are investment bank Goldman Sachs and rival Morgan Stanley. They will be reporting before Wall Street’s opening bell on Wednesday and Thursday respectively. Quarterly EPS for Goldman Sachs is expected to stand at $4.90 and for Morgan Stanley at $0.77.
US banks’ bottom lines are expected to benefit throughout the year from interest rate increases delivered by the Federal Reserve, translating into higher net interest income; markets have at the moment roughly priced in two quarter percentage point rate hikes to be delivered in 2018, with the FOMC’s most recently released dot plot projecting three. Another factor having the capacity to drive financials moving forward is the prospect of deregulation. US stock markets are closed on Monday for Martin Luther King Jr. Day.
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