Wednesday, January 16, 2013
Investors have a slew of data to chew on today, ranging from
earnings reports from
) to a benign-looking inflation reading. Also on tap for release
a little later are Industrial Production and Homebuilder
Sentiment Index readings, both of which are expected to show
gains from the preceding months. The Fed's Beige Book will also
come out this afternoon.
But the focus today is on bank earnings, headlined by positive
earnings surprises from
. While Goldman's results show all-around strength, the market
may not be as enthusiastic about JPM's results given the
shortfall on the revenue front and net interest margin pressures.
) were along the lines of JPM, beating on earnings, but coming
short on the top line.
Earnings growth expectations for the Finance sector as a whole
had come down in recent days following the banks' major
foreclosure related settlement, with the negative revision
particularly pronounced for
Bank of America
) which experienced a roughly $2 billion negative swing in
expected earnings. But the roughly 43% increase in JPM's fourth
quarter earnings this morning should help offset some of that
weakness. As of this morning, the composite fourth quarter
earnings growth for the Finance sector (combining the results
that have come out with those still to come) stands at 9.2%. This
compares to earnings growth of +23.3% for the sector in the third
The overall scorecard for all sectors shows a total 36 fourth
quarter 2012 earnings reports as of this morning, with total
earnings growth for this Finance-heavy group of 36 companies at
up +22.8% from the same period last year. Outside of Finance,
total earnings growth for the 36 companies that have reported
results are up only +2% from the same period.
It is still admittedly early going for the fourth quarter
reporting season, but what we have seen thus far is better than
what these same companies did in the previous quarter. In terms
of surprises, 58.3% of the companies have beat earnings
expectations with a median surprise of 1.6%. Revenue surprises,
which were a big disappointment in the previous quarter, are
running at a respectable 52.8% at this stage.
The market has sustained the positive momentum from last year
into these early days of 2013. But sustaining the trend in the
coming days will depend on how the fourth quarter earnings season
unfolds. And of course, we have the big debt ceiling issue
staring us in the face that could potentially be quite unsettling
for the market.
Director of Research
BANK OF AMER CP (BAC): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
US BANCORP (USB): Free Stock Analysis Report
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