Earnings reports from JPMorgan, Morgan Stanley and other banks missed market expectations and have set a weak tone ahead of scheduled reports for Bank of America and Goldman Sachs.
JPMorgan Chase & Co. reported last week that diluted earnings per share (EPS) for the second quarter of fiscal 2022 totaled $2.76, down 27% from the same period last year. Net revenue reported in Q2 2022 was $30.7 billion, 1% more year-on-year, while net profit plunged 28% year-on-year to $8.6 billion.
Meanwhile, Morgan Stanley’s net income in the second fiscal quarter of 2022 fell 10.8% year-on-year to $13.1 billion, well below market expectations. Net income in Q2 2022 fell 28.6% y/y to $2.5 billion, while diluted earnings per share stood at $1.39, down 24.9% over the same period in 2021. By segment, Institutional Securities earnings stood at $6.1 billion, down from $7.1 billion a year earlier. Wealth and Investment Management revenues also shrunk compared to the same period in 2021, to $5.7 billion and $1.4 billion, respectively.
BlackRock reported EPS of $7.06, down 21% y/y. Revenue for the same quarter fell 6% from $4.8 billion to $4.5 billion, with operating income of $1.7 billion, down 14% over the same period last year.
Wells Fargo & Co revenue for Q2 2022 was $17.03 billion, down 15.9% over the same period last year. Net income was almost two times lower year on year, down about 48% to reach $3.11 billion in the last quarter of 20221, with diluted earnings per share also down 46% to $0.74 per year.
In its earnings for Q2 2022 Citigroup Inc. grew 11% year-on-year to $19.6 billion. Net income was $4.5 billion, down 27%, while earnings per share (EPS) fell 23% year-on-year to $2.19. The decline in revenue was driven by higher cost of credit and higher expenses, but was partially offset by an increase in revenue.
Bank of America maintains its buy rating ahead of Monday’s Q2 earnings report, although the longer-term price trend is still down. For the quarter to be reported, the Zacks Consensus EPS Forecast is at $0.77, recording a double-digit decline of 25% in year-over-year quarterly revenue. Additionally, six analysts have lowered their quarterly outlook over the past 60 days, with the Consensus Forecast Trend down 5%. The reported EPS for the same quarter last year was $1.03. Bank of America is currently at Zacks Rank #3 (Hold). In Q1 2022, the market reacted badly to the quarterly results. However, quarterly earnings forecasts show top-line strength; estimated quarterly revenue of $23 billion recorded a solid 7% growth in sales from last years quarter.
Meanwhile, Goldman Sachs Group, Inc. will also report earnings on the same day, before the market opens. According to Zacks Investment Research, based on 9 analyst forecasts, the consensus EPS forecast for the quarter was $6.99 reflecting a 53.46% year-on-year decline. The reported EPS for the same quarter last year was $15.02. For their most recent quarter, The Goldman Sachs Group reported earnings of $10.76 per share, beating the Zacks Consensus Estimate of $8.61 per share. This reflects a positive earnings surprise of 24.97%.
Tesla will reveal how a tough Q2 affected revenue and how upgrades at its factories are progressing. CEO of Tesla Inc. Elon Musk said last Friday that the company could lower the price of electric vehicles if inflation eased. Musk wrote the comments in a tweet in response to user questions about whether Tesla has plans to lower its price due to problems with the supply chain. Earlier this month, Tesla said June was the most successful month in its history in terms of production, despite ongoing problems with the supply chain that resulted in temporary closures and layoffs at some of its plants. Tesla, Inc. expected to report earnings on Wednesday, after market close. Zacks’ Consensus estimates for earnings and quarterly earnings to be reported are pegged at $1.91 per share and $17.48 billion, respectively. Tesla reported revenue of $18.76 billion in the last reported quarter, representing a +80.5% year-on-year change. EPS $3.22 for the same period compared to $0.93 last year. Compared to the Zacks Consensus Estimate of $17.28 billion, the reported revenue represents a +8.57% surprise.
Meanwhile, Twitter’s earnings report is likely to be overshadowed by the ongoing dispute with Elon Musk. Twitter, Inc.’s board of directors. asked the company’s shareholders to approve the takeover of the company by the CEO of Tesla, Inc. Elon Musk, as the final step towards a deal. On Tuesday, Twitter initiated a lawsuit against Elon Musk in Delaware Chancery Court, after he ended a $44 billion deal to buy the social media company. Elon Musk has officially asked for more time to prepare for the Twitter, Inc. lawsuit. Twitter, Inc. is expected to report earnings on Friday before the market opens. The instant messaging service is expected to post quarterly earnings of $0.16 per share in its forthcoming report, which represents a year-over-year change of -20%. Revenue is expected to be $1.33 billion, up 11.8% from last year’s quarter.
Netflix will be put to the test once again as investors brace for more subscriber losses this quarter. Netflix Inc. announced last week that it would partner with Microsoft on a new ad-supported subscription plan for clients, in addition to its existing ad-free basic, standard and premium plans. The statement was published a day after the Wall Street Journal reported that Netflix was talking to several Hollywood studios about changing agreements to allow streaming companies to offer their content on ad-supported versions of the platform. However, this effort, will not affect the earnings report this time. Netflix, Inc. is expected to report earnings on Tuesday, after market close. Zacks’ Consensus forecast for earnings is currently pegged at $2.90 per share, down 2% over the past 30 days. The figure represents a 2. 36% decline from the figure reported last year’s quarter. Netflix expects total revenue to increase 9.7% year over year to $8.053 billion
Source : Zacks Investment Research
Ady Phangestu
Market Analyst – HF Educational Office – Indonesia
