Are the Big Banks Good Buys Heading Into Earnings? (2024)

Today marks the first day of the second quarter, which means that the first-quarter earnings announcement season is right around the corner.

And I couldn’t be more excited.

I’m a numbers guy, so earnings season is always my favorite time of year. This is when every company must open its books, reveal its quarterly numbers, and share how it expects to perform in the coming quarters. Typically, companies that post solid results are rewarded and companies that post disappointing results or weak forward-looking guidance are punished.

As always, the big banks — Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) — are among the companies first to report, so let’s see if they’re good buys heading into earnings season…

• Bank of America Corporation is set to report earnings for its first quarter in fiscal year 2022 on Monday, April 18. Analysts expect earnings of $0.77 per share, a 10% decrease from last year’s earnings. Estimates call for revenue of $23.49 billion, a 2.1% increase year-over-year.
• Citigroup will report earnings for its first quarter in fiscal year 2022 on Thursday, April 14. Analysts expect to see earnings for the upcoming quarter of $1.80 per share, down 50% year-over-year from earnings of $3.62 per share. Revenue estimates of $18.54 billion represent – a 4.1% year-over-year revenue decline.
• JPMorgan Chase is scheduled to release earnings on Wednesday, April 13. For its first quarter in fiscal year 2022, analysts expect earnings of $2.76, nearly a 40% decrease from earnings of $4.50 a year prior. And revenue estimates of $31.23 billion would mark 2.7% growth.
• Wells Fargo will report its results for its first quarter in fiscal year 2022 on Thursday, April 14. Analysts expect earnings of $0.82 per share, down nearly 20% year-over-year. Revenue is expected to dip 1.3% year-over-year to $17.83 billion.

As you can see in the Report Card above, the Total Grades are mixed. Bank of America and Wells Fargo earn a B-rating, making them “Buys” right now. However, JPMorgan and Citigroup both hold D-ratings, so they’re “Sells.”

I should add that even though BAC and WFC are considered “Buys” overall, their ratings aren’t very strong. In fact, each bank holds a mediocre rating in a key factor. This isn’t too surprising, as all of these banks are expected to report a year-over-year earnings decline. As we discussed, BAC and JPM expect to see slight revenue growth, while Citigroup and Wells Fargo are forecast to announce a year-over-year revenue decline.

So, with the big banks’ growth clearly tapping the brakes, why do BAC and WFC both receive a B-rating?

The fact of the matter is that both banks rank high on what I call their “Quantum Scores.” These scores play a big role in how I determine a company’s overall grade with my proprietary stock-grading system. I will explain why next Tuesday, April 5, at 4 p.m. Eastern time, during my Prediction 2022 event. If you haven’t reserved you spot yet, I encourage you to do so now.

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Sincerely,

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: