Earnings season is kicking off this week and, like always, it is being led by the big banks.
14 years after the start of the financial crisis, the banks are still out of favor on Wall Street. This year, most banks stocks are down double digits.
But are things really that bad? The Federal Reserve is raising rates which should help bank earnings. But the mortgage market has slowed sharply. Some banks will see a big hit to earnings as this part of their business remains slow.
But the banks are now, as a group, pretty cheap. They have low P/Es and P/B ratios. Some pay dividends over 4%. Others are doing share buybacks.
Are the big banks a deal during this market sell-off?
5 Big Bank Earnings Charts to Watch This Week
1.
JPMorgan Chase & Co
JPM
JPMorgan Chase is one of the banks everyone watches each quarter. Led by CEO Jamie Dimon, it’s seen as a bellwether.
JPMorgan Chase has a solid earnings surprise history, with only 3 misses in the last 5 years. But last quarter was one of those misses.
Shares are down 28.7% year-to-date and now trade with a forward P/E of just 10.1.
Should JPMorgan Chase be on your shortlist?
2.
Citigroup
C
Citigroup has the best earnings surprise track record of these 5 banks. It hasn’t missed in 5 years. What an incredible record given the pandemic and its global business.
But that hasn’t stopped shares from falling 23.5% year-to-date.
Citigroup is dirt cheap, with a forward P/E of 6.9. It also has a low P/B ratio of 0.5.
Citigroup pays the largest dividend of this group, with a yield of 4.4%.
Is Citigroup on sale?
3.
Wells Fargo & Company
WFC
Wells Fargo has beat 7 quarters in a row. It’s a big mortgage bank and has already warned that that business has slowed.
Shares are down 17% year-to-date. Wells Fargo is cheap at 10x forward earnings.
It pays a dividend, yielding 2.5%.
Is it time to consider Wells Fargo again?
4.
Bank of America Corp.
BAC
Bank of America has beat earnings 6 quarters in a row. But that hasn’t stopped shares from falling 29.3% year-to-date.
Bank of America is cheap too, with a forward P/E of 9.6.
It pays a dividend of 2.6%.
Berkshire Hathaway has a big stake in Bank of America. Should investors have it on their short list too?
5.
First Republic Bank
FRC
First Republic Bank is a private wealth bank in San Francisco with a market cap of $27 billion. It has beat on earnings 11 quarters in a row which is an impressive record during the pandemic.
While shares soared during the pandemic, they have fallen 27.2% year-to-date.
First Republic Bank is known for its growth, and not for its dividend, which yields just 0.7%.
Is now the time to consider First Republic Bank?
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