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.
Also during my Prediction 2022 event, we’ll review…
- A certain type of investment I urge you to buy immediately…
- The #1 stock to buy now…
- A stock poised to crash…
- How you can position yourself for six money-doubling opportunities in the next 12 months
Let me add that I’m also going to share what could be the biggest prediction of my career. I correctly predicted the stock market collapse of 1987… the dot-com crash… and the 2008 financial crisis…
I can promise you this: You’re not going to want to miss what I have to say during Prediction 2022.
So, I do hope you join me. If you sign up now, I’ll send you my brand-new report 13 Stocks to Sell Immediately – it’s yours, absolutely free. I share 13 stocks that are “rocks” and should be considered immediate sells. Some of these are blue-chip stocks, while others are popular pandemic stocks. If you own any of these 13 stocks, you’ll want to sell them now. Sign up now for the Prediction 2022 event to receive your free report.
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:
Bank of America Corp (BAC), JPMorgan Chase & Co (JPM)
FAQs
Some Cons of Big Banks
There are downsides to big banks. In some cases, larger financial institutions may offer less competitive rates on loans and charge larger fees than community banks or small credit unions. If you take out a loan with a big bank, it might take longer to process, too.
What are the benefits of big banks? ›
What are the benefits and drawbacks of using a big bank?
- Wider range of products and services.
- Usually more ATMs and branch locations.
- Often better, more up-to-date technology.
- Greater ease banking abroad.
- More around-the-clock customer support.
- May charge more and higher fees.
- Generally offer lower interest rates.
Average account fees tend to be lower at small banks than at bigger institutions. Smaller banks, on average, offer higher rates on interest-bearing checking accounts, savings, and CDs. Also, smaller institutions provide better terms on credit cards and small business loans.
Are banks a good investment? ›
Pros of bank stocks
Most banks pay dividends: Dividends are seen as an important signal of financial health for banks, and so the vast majority of bank stocks do pay dividends consistently.
Are local banks better than big banks? ›
Compared to megabanks, local institutions offer lower fees, more free accounts, relationship-based banking, and personalized products and services. When you're ready to make the switch to a local bank, you'll want to visit the credit unions and community banks in your neighborhood.
Are small banks in trouble? ›
There are other signs of mounting stress among smaller banks. In 2023, 67 lenders had low levels of liquidity — meaning the cash or securities that can be quickly sold when needed — up from nine institutions in 2021, Fitch analysts said in a recent report.
Should I move my money to a bigger bank? ›
Regional banks can still keep your money safe, and some offer better interest rates and customer service than large national banks. Most regional banks are FDIC insured, so your money is protected even if the bank fails.
Why not to use big banks? ›
Big banks keep your savings secure, but they pay extremely low interest rates, so you'll lose money to inflation. You can get much better rates, and the same FDIC insurance as big banks, with high-yield savings accounts. With money you don't need in the near future, the best way to beat inflation is by investing.
What are the disadvantages of a bank? ›
One of the major downsides of traditional banking is the potential for fees. Traditional banks often charge various fees for services such as overdrafts, ATM withdrawals, and account maintenance. These fees can quickly add up and eat into your savings if you're not careful.
Is it safe to put a lot of money in the bank? ›
Bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC), which is part of the federal government. The insurance covers accounts containing $250,000 or less under the same owner or owners.
Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.
Is it safe to have a lot of money in the bank? ›
A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category. Banks that are insured by the FDIC often say “Member FDIC” on their websites.
Do banks do well in a recession? ›
Bank stocks typically underperform heading into a recession. They act as a proxy for the health of the economy. If the market is looking 18 months into the future, they expect a slowdown in activity from the banks. However, once we're in a recession, banks typically outperform.
Do banks have a future? ›
The future of banking will look very different from today. Faced with changing consumer expectations, emerging technologies, and new business models, banks will need to start putting strategies in place now to help them prepare for banking in 2030. Explore eight key trends below that are changing the banking landscape.
What is the best bank to invest in? ›
Compare the best bank companies
| Company (Ticker) | Sector | Market Cap |
|---|
| Bank of America (BAC) | Financials | $297.13B |
| Wells Fargo & Co. (WFC) | Financials | $212.20B |
| Citigroup (C) | Financials | $119.54B |
| UBS (UBS) | Financials | $87.92B |
2 more rowsOne of the major downsides of traditional banking is the potential for fees. Traditional banks often charge various fees for services such as overdrafts, ATM withdrawals, and account maintenance. These fees can quickly add up and eat into your savings if you're not careful.
What are two disadvantages of commercial banks? ›
Disadvantages of commercial banks are as follows:
- The funds received from the commercial banks are of short duration and the procedure of obtaining funds is a time taking affair as there is a lot of verification that needs to be done from the bank end.
- The bank can set difficult conditions for granting of loans.
Banks can fail for many reasons, but generally they fall into a few broad categories: a run on deposits (which leaves the bank without the cash to pay everyone who wants to withdraw their money); too many bad loans or assets that fall precipitously in value (both of which erode the bank's capital reserves); or a ...
