Financial Services Earnings Preview for Q3 ’24
Next week, Q3 ’24 earnings season kicks off with a focus on the financial services sector. Investors are eagerly anticipating the financial results of major players like JPMorgan Chase & Co, Wells Fargo & Company, Blackrock, and BNY Mellon, all scheduled to report on Friday, October 11th.
Expectations for Financial Services Sector
According to data from Briefing.com, only BNY Mellon is expected to show year-over-year EPS growth for Q3 ’24 among the companies reporting on 10/11. The sector as a whole is projecting modest +1.8% EPS growth, a significant drop from the robust +23.5% growth seen in Q3 ’23. Revenue growth is also expected to dip to +4.3% in Q3 ’24, down from +5.1% in Q3 ’23.
Despite the challenging EPS comparison, recent quarters have seen financial stocks exceed expectations due to factors like low credit reserves, strong capital market activity, corporate loan growth, and healthy home sales. These positive trends have contributed to the growth of major banks.
EPS and Revenue Growth Trends
Looking at the progression of EPS and revenue growth from Q4 ’23 to Q2 ’24, data from LSEG reveals some interesting insights:
- Q1 ’24: Expected +4.8% EPS growth, actual +13.1%
- Q2 ’24: Expected +8.8% EPS growth, actual +20.7%
- Consistent revenue growth of 5% – 7% since Q4 ’22
Major banks like JPMorgan, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley are expected to perform well in the current environment, driven by positive credit profiles and strong capital market activity.
Regional banks may start to outperform when the Treasury yield curve steepens, allowing for increased profitability.
S&P 500 Data Insights
- Quarterly bump in S&P 500 to $266.66
- Forward PE estimate at 21.5x
- S&P 500 earnings yield at 4.66%
- Q2 ’24 EPS estimate increased by 2%
While the S&P 500 EPS growth is expected at 5% in Q3 ’24, there are indications that sell-side expectations may be tempered.
Summary and Conclusion
As we await the financial services earnings reports, it’s essential to stay informed and cautious. While past performances can offer insights, investing always carries risks.
The upcoming nonfarm payroll report and GDP growth projections indicate continued economic health, which could impact consumer credit metrics positively.
Stay tuned for more updates and analysis as the earnings season unfolds.
Disclaimer
None of the information provided here is a recommendation or advice. It is purely an opinion based on available data. Investing involves risks, and past performance may not guarantee future results.