This week, nearly 100 publicly traded companies are reporting earnings for the third quarter, 51 are S&P 500 constituents.
Here’s how sector growth stands now, and what names to look out for this week:
Tuesday, October 14:
JPMorgan Chase (NYSE:JPM)
After a disappointing second quarter due to weaker than expected trading volumes for fixed income and equities as well as lower mortgage originations, the bank enters the third quarter season with an EPS estimate of $1.45, which would show a year over year increase of 2% on the bottom-line, while the top-line is expecting an increase of 1%. With lending and trading volumes up, revenues for those areas are expected to show an improvement for Q3.
Similar to JPM, weakness in trading volumes and mortgages hurt the bank last quarter. Unlike JPM, Citigroup still has another large $7 billion settlement to pay related to mortgage practices. The EPS consensus from Estimize is $1.18 versus the Wall Street consensus of $1.12, implying a 16% increase, with revenues of $19.1B suggesting a nearly 7% increase.
Wells Fargo (NYSE:WFC)
The country’s largest mortgage lender which is often seen as a bellwether for the housing market, funded a mere $47B worth of mortgages in the most recent quarter. No questioning this was a disappointing figure, but a marked improvement over the first quarter’s $36B, and a good sign that loan growth was heading in the right direction. Investors will look for that momentum to continue in the third quarter, with current EPS estimates of $1.02 showing a slight increase of 3% and revenues of $21B showing an increase of 2%.
Old tech and semiconductor company Intel has been one of the best performing stocks of the year. Shares of Intel are now trading 23% higher than where they began the year. Intel’s stock got one big bump last quarter when management raised guidance citing strong demand from enterprise customers. This week analysts on Estimize expect Intel to follow up on its strong performance last quarter by reporting in-line with Wall Street expectations for a 12% gain to the bottom line. Analysts on Estimize expect total revenue to come in at $14.471 billion, 7% higher than the total reported in the third quarter of 2013.
Wednesday, October 15:
This week we’ll get two reports tied closely to consumer spending, Retail Sales on Wednesday and Consumer Sentiment on Friday. After posting modest increases throughout much of the summer, September estimates for Retail and Food Services Sales from the Estimize community stand at $444,589, which would translate to a very small month over month increase of 0.05%, the second lowest increase of the year after January posted negative 0.6%. Typically, September is a strong month for retailers due to the continuation of back-to-school spending.
Analysts on Estimize and Wall Street agree that Netflix’s earnings will cool slightly this quarter. Estimize contributors expect EPS to drop from $1.15 last quarter to $1.00 this period while Wall Street is much lower at $0.93. If Netflix’s profits come in below $1.15 as predicted this will be Netflix’s first quarter over quarter decline in the past 2 years. However, the streaming video company still has red hot fundamentals, earnings have grown by at least 135% on a year over year basis in each of the past 6 quarters. This quarter analysts on Estimize expect Netflix to grow its bottom line by a slightly lower but still impressive 92%. In important news last week, President Obama threw his support behind the FCC preserving net neutrality, which is a critical component to Netflix’s margins.
eBay recently announced it will be spinning off PayPal to a separate business. Many members of the tech community have been calling for a spin off for quite some time now, insisting that PayPal has unique challenges which require more attention from management. Now PayPal will be set free in a competitive mobile payments landscape against the likes of Apple Pay, Square, and Stripe. This quarter the Estimize community is expecting eBay to report in-line with Wall Street on the top and bottom line. If eBay reports in-line its earnings and revenue growth rates will fall to 5% (from roughly 13% over the past year) and 12% (from 14) respectively.
Bank of America (NYSE:BAC)
During the quarter, the bank paid off a $17B mortgage lending settlement stemming largely from the purchases of Merrill Lynch & Co. and Countrywide Financial. The settlement amount is the largest ever reached between the U.S. and a single company, and is approximately equal to the bank’s total profit for the past three years. Hence the expectations for EPS are very low at $0.01, which would represent a 96% drop from Q3 2013. Revenues are expected to show a 1% drop.
Thursday, October 16:
Contributing analysts on Estimize expect the search giant to report earnings of $6.55 per share while the Street is only looking for $6.47. The Estimize community is 1.5% higher than the Street on revenue.Google remains a near monopoly in search and data driven advertisements, although Facebook did recently relaunch its Atlas advertising platform to target Google’s core business by tracking personalized data across multiple devices. Google’s profit outlook remains robust however, analysts at Estimize expect Google’s EPS to jump 22% compared to the same quarter of last year.
Goldman Sachs (NYSE:GS)
Goldman seems to be in a good position this quarter, just as they have been throughout this year. Poised to benefit from the robust M&A environment, the bank is anticipated to post the highest year-over-year growth on the top and bottom-line amongst all the banks. Current EPS expectations stand at $3.75, a whopping $0.50 higher than the Wall Street consensus, representing a YoY increase of 30%. Revenue expectations of $8.1B suggest a 21% increase over Q3 2013. It’s important to keep in mind the year-ago quarter was very weak, making for easier comparisons this time around.
Friday, October 17:
Housing data scheduled to be released Friday should help to bring some clarity around the current US Housing situation which appeared to be volatile this summer. After seeing a MoM increase of 22.9% in July, all momentum came crashing down in August when housing starts fell 14.4%. The Estimize community believes housing starts will improve in September, with a growth estimate of 5.47%.
Morgan Stanley (NYSE:MS)
Similar to Goldman Sachs, Morgan Stanley will likely benefit from an active M&A underwriting season in the third quarter. Not to mention the growth of Morgan Stanley’s wealth management business which saw client assets surpass the $2 trillion mark last quarter. For the third quarter, the Estimize community anticipates the bank will post EPS of $0.56, growing 12% YoY, with revenues of $8.35B growing nearly 6%.
How are we doing so far?
With only 28 companies from the S&P 500 reporting at this point, you can already see how overly conservative the Wall Street (WS) consensus has been, something the sell-side is historically known for. Estimize has seen 46% of companies beat EPS, while a much higher 60% of companies have beat the WS consensus. As far as revenues go, 57% of companies have surpassed the Estimize consensus, while 68% have beat the WS consensus.
