Q2 Earnings Season Kicks Off with Positive Momentum in Banking Sector

Q2 Earnings Season Starts Positively

Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>> Here are the key points: The big banks kicked off the Q2 reporting cycle for the Finance sector, with the market markedly appreciating the results from Bank of America BAC and Goldman Sachs GS. That said, all of the major banks came out with better-than-expected results. The key difference between the Bank of America and, say, JPMorgan JPM results was the former's explicit favorable outlook for the second half of the year, particularly in the context of net interest income. Bank of America also came out with good investment banking results, but we are seeing improving results on that count from all of the players, including Goldman Sachs. Management teams had been talking about 'green shoots' on the investment banking side for some time now, but greater visibility on the monetary policy front appears to have finally cleared the path for greater deal flow. Banks are still facing multiple headwinds that are pressuring their profitability, including margin pressures and subdued loan demand, but there is reasonable optimism about their earnings outlook due to the beneficial effects of the expected Fed easing cycle. While we have a reasonably representative sample of results from the Finance sector, it is still very early for other sectors. For the quarter as a whole, S&P 500 earnings are expected to be up +8.7% on +4.8% higher revenues. As we have been flagging all along, the Q2 revisions trend was very favorable, with estimates barely coming down since the quarter got underway. Estimates increased for the Tech, Utilities, Transportation, Autos, and Consumer Discretionary sectors, helping partly offset negative cuts for the other sectors. The revisions trend for the Tech sector has been positive for a while now, which is important since the sector alone is on track to bring in almost 30% of all S&P 500 earnings over the coming four-quarter period. The 2024 Q2 quarter will be the fourth consecutive quarter of robust Tech sector earnings growth, with total earnings for the sector expected to be up +15.5% from the same period last year. For full-year 2024, Tech sector earnings are expected to be up +17.2%, followed by another strong showing expected next year. The chart below shows how the aggregate earnings total for the Tech sector has evolved over the past year. Image Source: Zacks Investment Research A big contributing factor to the Tech sector's positive earnings outlook is the sector's margins outlook, as the chart below shows. Image Source: Zacks Investment Research We are already in record territory with Tech sector margins, with 2024 margins expected to exceed last year's record level. The expectation is for some more gains next year and the year after, with the ever-growing share of higher-margin software and services in the overall Tech earnings pie explaining the favorable trend. Part of this likely also reflects optimism about the impact of AI on the sector's productivity. The Earnings Big Picture The chart below shows the overall earnings picture on a quarterly basis. Image Source: Zacks Investment Research The chart below shows the overall earnings picture on an annual basis. Image Source: Zacks Investment Research Please note that this year's +8.8% earnings growth on only +1.6% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +8.7%, and the revenue growth rate improves to +3.9%. In other words, about half of this year's earnings growth comes from revenue growth, with margin gains accounting for the rest. On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Finance, and Consumer Discretionary as the big gainers. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zacks Earnings Trends Highlights: Bank of America, Goldman Sachs and JPMorgan

Chicago, IL - June 18, 2024 - Zacks Director of Research Sheraz Mian says, "Except for the revenue beats percentage, which at 55.6% is the lowest over the preceding 20-quarter period, all of the other performance metrics are tracking better relative to what we have seen recently." Earnings Season Starts Positively Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>> Here are the key points: The big banks kicked off the Q2 reporting cycle for the Finance sector, with the market markedly appreciating the results from Bank of America BAC and Goldman Sachs GS. That said, all of the major banks came out with better-than-expected results. The key difference between the Bank of America and, say, JPMorgan JPM results was the former's explicit favorable outlook for the second half of the year, particularly in the context of net interest income. Bank of America also came out with good investment banking results, but we are seeing improving results on that count from all of the players, including Goldman Sachs. Management teams had been talking about 'green shoots' on the investment banking side for some time now, but greater visibility on the monetary policy front appears to have finally cleared the path for greater deal flow. Banks are still facing multiple headwinds that are pressuring their profitability, including margin pressures and subdued loan demand, but there is reasonable optimism about their earnings outlook due to the beneficial effects of the expected Fed easing cycle. While we have a reasonably representative sample of results from the Finance sector, it is still very early for other sectors. For the quarter as a whole, S&P 500 earnings are expected to be up +8.7% on +4.8% higher revenues. As we have been flagging all along, the Q2 revisions trend was very favorable, with estimates barely coming down since the quarter got underway. Estimates increased for the Tech, Utilities, Transportation, Autos, and Consumer Discretionary sectors, helping partly offset negative cuts for the other sectors. The revisions trend for the Tech sector has been positive for a while now, which is important since the sector alone is on track to bring in almost 30% of all S&P 500 earnings over the coming four-quarter period. The 2024 Q2 quarter will be the fourth consecutive quarter of robust Tech sector earnings growth, with total earnings for the sector expected to be up +15.5% from the same period last year. For full-year 2024, Tech sector earnings are expected to be up +17.2%, followed by another strong showing expected next year. The chart below shows how the aggregate earnings total for the Tech sector has evolved over the past year. A big contributing factor to the Tech sector's positive earnings outlook is the sector's margins outlook. We are already in record territory with Tech sector margins, with 2024 margins expected to exceed last year's record level. The expectation is for some more gains next year and the year after, with the ever-growing share of higher-margin software and services in the overall Tech earnings pie explaining the favorable trend. Part of this likely also reflects optimism about the impact of AI on the sector's productivity. The Earnings Big Picture Please note that this year's +8.8% earnings growth on only +1.6% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +8.7%, and the revenue growth rate improves to +3.9%. In other words, about half of this year's earnings growth comes from revenue growth, with margin gains accounting for the rest. On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Finance, and Consumer Discretionary as the big gainers. Today you can access their live picks without cost or obligation. Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. Buy 5 Stocks BEFORE Election Day Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins). Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement. They include a medical manufacturer that gained +11,000% in the last 15 years... a rental company absolutely crushing its sector... an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract... and a giant chipmaker building huge plants in the U.S. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Q2 Earnings Season Starts Positively

Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>> Here are the key points: The big banks kicked off the Q2 reporting cycle for the Finance sector, with the market markedly appreciating the results from Bank of America BAC and Goldman Sachs GS. That said, all of the major banks came out with better-than-expected results. The key difference between the Bank of America and, say, JPMorgan JPM results was the former's explicit favorable outlook for the second half of the year, particularly in the context of net interest income. Bank of America also came out with good investment banking results, but we are seeing improving results on that count from all of the players, including Goldman Sachs. Management teams had been talking about 'green shoots' on the investment banking side for some time now, but greater visibility on the monetary policy front appears to have finally cleared the path for greater deal flow. Banks are still facing multiple headwinds that are pressuring their profitability, including margin pressures and subdued loan demand, but there is reasonable optimism about their earnings outlook due to the beneficial effects of the expected Fed easing cycle. While we have a reasonably representative sample of results from the Finance sector, it is still very early for other sectors. For the quarter as a whole, S&P 500 earnings are expected to be up +8.7% on +4.8% higher revenues. As we have been flagging all along, the Q2 revisions trend was very favorable, with estimates barely coming down since the quarter got underway. Estimates increased for the Tech, Utilities, Transportation, Autos, and Consumer Discretionary sectors, helping partly offset negative cuts for the other sectors. The revisions trend for the Tech sector has been positive for a while now, which is important since the sector alone is on track to bring in almost 30% of all S&P 500 earnings over the coming four-quarter period. The 2024 Q2 quarter will be the fourth consecutive quarter of robust Tech sector earnings growth, with total earnings for the sector expected to be up +15.5% from the same period last year. For full-year 2024, Tech sector earnings are expected to be up +17.2%, followed by another strong showing expected next year. The chart below shows how the aggregate earnings total for the Tech sector has evolved over the past year. Image Source: Zacks Investment Research A big contributing factor to the Tech sector's positive earnings outlook is the sector's margins outlook, as the chart below shows. Image Source: Zacks Investment Research We are already in record territory with Tech sector margins, with 2024 margins expected to exceed last year's record level. The expectation is for some more gains next year and the year after, with the ever-growing share of higher-margin software and services in the overall Tech earnings pie explaining the favorable trend. Part of this likely also reflects optimism about the impact of AI on the sector's productivity. The Earnings Big Picture The chart below shows the overall earnings picture on a quarterly basis. Image Source: Zacks Investment Research The chart below shows the overall earnings picture on an annual basis. Image Source: Zacks Investment Research Please note that this year's +8.8% earnings growth on only +1.6% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace changes to +8.7%, and the revenue growth rate improves to +3.9%. In other words, about half of this year's earnings growth comes from revenue growth, with margin gains accounting for the rest. On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Finance, and Consumer Discretionary as the big gainers. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.