~Disclaimer: Please come back to this as often as you need… I will be updating and replying to this for the foreseeable future… Plus, It’s a lot to take in!
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Lets Take A Look At An Analysis Highlight: JPMorgan, Bank of America, UnitedHealth, U.S. Bancorp and PNC Financial Services
Stocks that Research Analysts have show to have events impacting stocks and the financial markets: Morgan Chase & Co. (JPM), Bank of America Corporation (BAC), UnitedHealth Group Inc. (UNH), U.S. Bancorp (USB) and The PNC Financial Services Group Inc. (PNC)
Five corporate bigwigs (market capital > $85 billion) are slated to release third-quarter earnings results this week.
JPMorgan is expanding its footprint in new regions by opening branches. Aside from this, strategic buyouts, global expansion and digitization initiatives, and decent mortgage banking business are expected to continue aiding the company’s financials.
JPMorgan’s impressive capital deployments reflect earnings strength and a solid balance sheet will enhance shareholder value. Fed Chairman Jerome Powell’s signal of a possible tapering of the quantitative easing program this year and a likely rate hike in the second half of 2022 bode well for the financial sector. The company is set to release earnings results on Oct 13, before the opening bell.
Bank of America has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Opening of new branches, enhancing digital capabilities, opportunistic acquisitions and initiatives to manage costs will keep supporting profitability.
The company plans to add 2,200 more ATMs to its network too. These initiatives, along with the success of Zelle and Erica, have enabled it to improve digital offerings, and cross sell several products including mortgages, auto loans and credit cards. The acquisition of Axia Technologies will further strengthen the company’s healthcare payments business. The company is set to release earnings results on Oct 14, before the opening bell.
UnitedHealth has a strong market position and an attractive core business that continues to be driven by new deals, renewed agreements and expansion of service offerings. Its solid health services segment provides significant diversification benefits.
Its health service business, branded as Optum, is becoming increasingly valuable. The primary growth drivers for Optum are pharmacy care services, care delivery, technology, government services, and international. A sturdy balance sheet and a consistent cash flow generation enables investments in business and secures dividend to shareholders. The company is set to release earnings results on Oct 14, before the opening bell.
U.S. Bancorp provides banking and investment services through a network of 3,018 banking offices principally operating in the Midwest and West regions of the United States through online services and over mobile devices.
The acquisition of MUFG Union Bank will enhance its existing West Coast franchise. Its solid business model and diverse revenue streams are likely to aid its financials. Given a decent liquidity position, along with a manageable debt level and improving credit quality the company is expected perform well going forward.
Wall Street is gearing up to kick start the third-quarter 2021 earnings season this week. Market participants have high expectations from this earnings season as overall earnings of corporate America are likely to remain robust after skyrocketing in the second quarter. The company is set to release earnings results on Oct 14, before the opening bell.
The PNC Financial Services Group is one of the largest diversified financial services institutions in the United States. Going forward, the focus to expand the middle-market lending franchise, and bolster digital products and service offerings will likely drive bottom-line growth.
Given a strong balance sheet position, the execution of inorganic growth strategies to diversify revenue sources is likely to support the performance. Strong capital deployment activities are likely to drive confidence in the stock.The company is set to release earnings results on Oct 15, before the opening bell.
As of Oct 8, total second-quarter earnings of the market’s benchmark — the S&P 500 Index — are projected to jump 26.1% from the same period last year on 14% higher revenues, following 95% year-over-year earnings growth on 25.3% higher revenues in the second quarter and 49.3% year-over-year earnings growth on 10.3% higher revenues in first-quarter 2021.
Deep Dive into Q3 2021
Aggregate Estimates and Revisions
21Q3 Y/Y earnings are expected to be 29.6%. Excluding the energy sector, the Y/Y earnings estimate is 22.6%.
Of the 21 companies in the S&P 500 that have reported earnings to date for 21Q3, 76.2% have reported earnings above analyst estimates. This compares to a long-term average of 65.8% and prior four quarter average of 84.7%.
21Q3 Y/Y revenue is expected to be 14.0%. Excluding the energy sector, the growth estimate is 11.4%.
During the week of Oct. 11, 19 S&P 500 companies are expected to report quarterly earnings.
21Q3 Earnings Growth Highlights
The estimated earnings growth rate for the S&P 500 for 21Q3 is 29.6%. If the energy sector is excluded, the growth rate declines to 22.6%. The S&P 500 expects to see share-weighted earnings of $413.8B in 21Q3, compared to share-weighted earnings of $319.3B (based on the year-ago earnings of the current 505 constituents) in 20Q3.
All eleven sectors in the index expect to see an improvement in earnings relative to 20Q3. The energy and materials sectors have the highest earnings growth rates for the quarter, while the utilities sector has the weakest anticipated growth compared to 20Q3.
The energy sector has the highest earnings growth rate (1487.8%) of any sector. It is expected to earn $20.5B in 21Q3, compared to earnings of $-1.5B in 20Q3. All five sub-industries in the sector are anticipated to see higher earnings than a year ago. The oil & gas exploration & production (1433.3%) and integrated oil & gas (948.7%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 1257.7%.
The materials sector has the second highest earnings growth rate (92.4%) of any sector. It is expected to earn $15.6B in 21Q3, compared to earnings of $8.1B in 20Q3. Ten of the 11 sub-industries in the sector are anticipated to see higher earnings than a year ago. The fertilizers & agricultural chemicals (1036.3%) and steel (981.5%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 60.2%.
The utilities sector has the lowest earnings growth rate (0.3%) of any sector. It is expected to earn $14.6B in 21Q3, compared to earnings of $14.5B in 20Q3. Two of the five sub-industries in the sector are anticipated to see lower earnings than a year ago. The gas utilities (-35.0%) and multi-utilities (-4.9%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate improves to 2.4%.
21Q4 Earnings Growth Highlights
The estimated earnings growth rate for the S&P 500 for 21Q4 is 22.2%. If the energy sector is excluded, the growth rate declines to 16.0%. The S&P 500 expects to see share-weighted earnings of $433.4B in 21Q4, compared to share-weighted earnings of $354.7B (based on the year-ago earnings of the current 505 constituents) in 20Q4.
Nine of the 11 sectors in the index expect to see an improvement in earnings relative to 20Q4. The energy and industrial sectors have the highest earnings growth rates for the quarter, while the utilities sector has the weakest anticipated growth compared to 20Q4.
The energy sector has the highest earnings growth rate (7470.6%) of any sector. It is expected to earn $21.5B in 21Q4, compared to earnings of $-0.3B in 20Q4. All five sub-industries in the sector are anticipated to see higher earnings than a year ago. The integrated oil & gas (2056.6%) and oil & gas exploration & production (1360.2%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 1741.7%.
The industrials sector has the second highest earnings growth rate (64.9%) of any sector. It is expected to earn $32.5B in 21Q4, compared to earnings of $19.7B in 20Q4. All seventeen sub-industries in the sector are anticipated to see higher earnings than a year ago. The airlines (94.5%) and aerospace & defense (89.0%) sub-industries have the highest earnings growth in the sector. If these sub-industries are removed, the growth rate declines to 11.0%.
The utilities sector has the lowest earnings growth rate (-0.4%) of any sector. It is expected to earn $8.6B in 21Q4, compared to earnings of $8.6B in 20Q4. One of the five sub-industries in the sector is anticipated to see lower earnings than a year ago. The electric utilities (-2.7%) and multi-utilities (1.8%) sub-industries have the lowest earnings growth in the sector. If these sub-industries are removed, the growth rate improves to 7.0%.
Exhibit 1: S&P 500 – Estimate Revisions by Sector
Exhibit 2: S&P 500 – Estimate Revisions History
The U.S. stock market has just come out of its worst month since March 2020, and rattled investors may need to buckle up for more turbulence in the weeks ahead. That’s because earnings season begins in mid-October—a multi-week period that brings additional volatility to the stock market.
Companies in the S&P 500 are expected to report quarterly earnings that are nearly 28% higher than the same quarter one year ago, according to analysts’ estimates. That’s more than double the five-year average earnings growth rate of 11.8%, according to figures compiled by FactSet. With only about 12 weeks left in the year, investors will also be keen to hear from company executives about the outlook for 2022.
The biggest theme that’s likely to be a focus in “The continued impact from supply chain disruptions,” says Bill McMahon, managing director and chief investment officer of active equity strategies at Charles Schwab. Many companies already have revised earnings guidance as a result of issues like congested ports, longer transit times from Asia and labor shortages—and more companies may do so, he adds.
The U.S. economy continued to witness a strong recovery from the pandemic-led devastation’s in the third quarter. Nationwide deployment of COVID-19 vaccines on a priority basis, massive fiscal stimulus and the continuation of easy money policies by the Fed resulted in a faster-than-expected reopening of the economy.
Strong pent-up demand supported by record-high personal savings, labor shortage and supply-chain disruptions resulted in a spike in inflation. Although the Fed initially considered the inflation to be transitory, it did recognize in its September FOMC meeting that inflation will remain elevated for a longer period than expected.
Moreover, the rapid spread of the highly infectious Delta variant of the coronavirus also disrupted normal economic activities to some extent. As a result, the revisions trend for third-quarter earnings showed signs of deceleration after remaining positive for the last few quarters. The negative impacts of the Delta variant and supply-chain disruptions resulted in the unfavorable shift in the revisions trend.
The reporting period for companies that adhere to a traditional calendar quarter, with a third quarter ending September 30, will kick off earnings season in the week of October 11. Just 19 companies in the S&P 500 are currently scheduled to report results this week, according to YCharts. The list is heavy on banks, with JPMorgan Chase, Bank of America, BlackRock, Citigroup and Morgan Stanley among the companies expected to report earnings.
Analysts are forecasting earnings growth of 17.2% for the financial sector in the third quarter, according to FactSet. This stock market sector is important to watch because it helps investors get a sense of the pace of broader economic growth, based on things like demand for loans and credit, McMahon notes. “Banks offer a good read on consumer and business spending.”
As longer-term interest rates—like the benchmark 10-year Treasury note—have started to increase, causing the yield curve to steepen, investors will be keen to hear from the biggest banks about the lending prospects for the current quarter and beyond, says Sam Stovall, chief investment strategist at CFRA Research.
Overall, Analyst expecting that Wall Street is gearing up to kick start the third-quarter 2021 earnings season this week. Market participants have high expectations from this earnings season as overall earnings of corporate America are likely to remain robust after skyrocketing in the second quarter.
The first two quarters of this year were favorably impacted since the corresponding quarters of last year were under lock-down owing to the global outbreak of the deadly coronavirus. However, the U.S. economy started reopening partially albeit at a very slow pace since the beginning of the third quarter of 2020.
Notwithstanding favorable comparisons with last year, the third-quarter 2021 earnings estimates reflect genuine growth, climbing 16.9% from the pre-pandemic third-quarter 2019
Earnings Season Week One—October 11-15
U.S. Earnings Announcements for October 13, 2021
| JPM | J P Morgan Chase & Co | $508,643,804,528 | Sep/2021 | $2.99 | 7 | 10/13/2020 | $2.92 | |
|---|---|---|---|---|---|---|---|---|
| GS | Goldman Sachs Group, Inc. (The) | $132,415,264,261 | Sep/2021 | $9.70 | 7 | 10/14/2020 | $9.68 | |
| BLK | BlackRock, Inc. | $128,514,128,453 | Sep/2021 | $9.63 | 4 | 10/13/2020 | $9.22 | |
| INFY | Infosys Limited | $91,797,434,351 | Sep/2021 | $0.17 | 5 | 10/14/2020 | $0.15 | |
| PGR | Progressive Corporation (The) | $53,221,329,000 | Sep/2021 | $0.33 | 5 | 10/14/2020 | $1.87 | |
| WIT | Wipro Limited | $48,176,215,381 | Sep/2021 | $0.07 | 2 | 10/13/2020 | $0.06 | |
| FRC | FIRST REPUBLIC BANK | $36,064,246,293 | Sep/2021 | $1.83 | 8 | 10/13/2020 | $1.61 | |
| DAL | Delta Air Lines, Inc. | $27,759,507,407 | Sep/2021 | $0.17 | 10 | 10/13/2020 | ($3.30) | |
| ETWO | E2open Parent Holdings, Inc. | $3,851,537,715 | Aug/2021 | $0.02 | 4 | N/A | N/A | |
| WAFD | Washington Federal, Inc. | $2,386,275,847 | Sep/2021 | $0.63 | 2 | 10/14/2020 | $0.45 | |
| SNBR | Sleep Number Corporation | $2,163,538,980 | Sep/2021 | $1.43 | 5 | 10/14/2020 | $1.79 | |
| PAYA | Paya Holdings Inc. | $1,235,872,344 | Sep/2021 | $0.11 | 4 | N/A | $0 | |
| WINA | Winmark Corporation | $758,614,608 | Sep/2021 | 4 | N/A | $2.43 | ||
| THTX | Theratechnologies Inc. | $338,954,146 | Aug/2021 | 0 | 10/15/2020 | ($0.09) | ||
| STCN | Steel Connect, Inc. | $131,240,499 | Jul/2021 | 4 | N/A | ($0.01) | ||
| SOTK | Sono-Tek Corporation | $72,106,150 | Aug/2021 | $0.01 | 1 | 10/14/2020 | $0.01 | |
| VMAR | Vision Marine Technologies Inc. | $54,352,684 | Aug/2021 | 4 | N/A | N/A | ||
| LEXX | Lexaria Bioscience Corp. | $37,681,679 | Aug/2021 | ($0.23) | 4 | N/A | ($0.30) | |
| RVPH | Reviva Pharmaceuticals Holdings, Inc. | $20,281,484 | Sep/2021 | ($0.25) | 4 | N/A |
U.S. Earnings Announcements for October 14, 2021
| UNH | UnitedHealth Group Incorporated | $385,144,027,316 | Sep/2021 | $4.41 | 10 | 10/14/2020 | $3.51 | |
|---|---|---|---|---|---|---|---|---|
| BAC | Bank of America Corporation | $382,532,378,155 | Sep/2021 | $0.70 | 7 | 10/14/2020 | $0.51 | |
| WFC | Wells Fargo & Company | $197,107,704,624 | Sep/2021 | $1.04 | 9 | 10/14/2020 | $0.56 | |
| MS | Morgan Stanley | $182,529,089,442 | Sep/2021 | $1.70 | 5 | 10/15/2020 | $1.59 | |
| C | Citigroup Inc. | $146,637,907,990 | Sep/2021 | $1.73 | 8 | 10/13/2020 | $1.40 | |
| USB | U.S. Bancorp | $92,413,490,105 | Sep/2021 | $1.15 | 9 | 10/14/2020 | $0.99 | |
| WBA | Walgreens Boots Alliance, Inc. | $40,983,098,558 | Aug/2021 | $1.02 | 6 | 10/15/2020 | $1.02 | |
| DPZ | Domino’s Pizza Inc | $17,701,814,627 | Sep/2021 | $3.11 | 10 | 10/08/2020 | $2.49 | |
| AA | Alcoa Corporation | $8,601,449,160 | Sep/2021 | $1.85 | 4 | 10/14/2020 | ($1.17) | |
| DCT | Duck Creek Technologies, Inc. | $5,866,466,777 | Aug/2021 | ($0.01) | 3 | 10/20/2020 | ($0.14) | |
| CMC | Commercial Metals Company | $3,840,682,859 | Aug/2021 | $1.26 | 3 | 10/15/2020 | $0.79 | |
| KARO | Karooooo Ltd. | $944,318,244 | Aug/2021 | $0.28 | 4 | N/A | N/A | |
| TACO | Del Taco Restaurants, Inc. | $327,531,762 | Sep/2021 | $0.10 | 4 | 10/15/2020 | $0.16 | |
| BKSC | Bank of South Carolina Corp. | $111,811,221 | Sep/2021 | 4 | N/A | $0.30 | ||
| MAYS | J. W. Mays, Inc. | $69,342,832 | Jul/2021 | 4 | N/A | ($0.20) | ||
| ARTW | Art’s-Way Manufacturing Co., Inc. | $16,530,747 | Aug/2021 | 4 | N/A | ($0.10) |
U.S. Earnings Announcements for October 15, 2021
| JBHT | J.B. Hunt Transport Services, Inc. | $107,161,039,208 | Sep/2021 | $1.77 | 7 | 10/16/2020 | $1.18 | |
|---|---|---|---|---|---|---|---|---|
| PLD | Prologis, Inc. | $95,015,931,030 | Sep/2021 | $1.03 | 8 | 10/20/2020 | $0.90 | |
| PNC | PNC Financial Services Group, Inc. (The) | $86,171,627,923 | Sep/2021 | $3.61 | 8 | 10/14/2020 | $3.39 | |
| TFC | Truist Financial Corporation | $81,197,742,964 | Sep/2021 | $1.19 | 8 | 10/15/2020 | $0.97 | |
| FCNCA | First Citizens BancShares, Inc. | $8,444,267,909 | Sep/2021 | $11.73 | 2 | 10/16/2020 | $14.03 | |
| CIT | CIT Group Inc (DEL) | $5,256,625,484 | Sep/2021 | $1.33 | 1 | 10/16/2020 | $0.84 | |
| SXT | Sensient Technologies Corporation | $3,758,640,818 | Sep/2021 | 0 | 10/16/2020 | $0.77 | ||
| BMI | Badger Meter, Inc. | $3,068,189,803 | Sep/2021 | $0.49 | 2 | 10/16/2020 | $0.51 | |
| HTLD | Heartland Express, Inc. | $1,278,204,249 | Sep/2021 | $0.30 | 4 | 10/16/2020 | $0.25 | |
| RBCAA | Republic Bancorp, Inc. | $1,062,780,606 | Sep/2021 | 2 | N/A | $0.98 |
Earnings Season Week Two—October 18-22
U.S. Earnings Announcements for October 18, 2021
