eToro
By eToro
2077 views

Big banks, big opportunity? Earnings season kicks off

Each quarter, publicly listed companies share their earnings reports with their investors and the general public. These reports provide insights into each company’s performance and more often than not, impact their stock prices. Over the next six weeks, companies will be sharing their reports for the first quarter of 2019 (Q1), with major banks kicking off the earnings season.

Reporting earnings after a bull run

This earnings season has a very meaningful backdrop: while Wall Street has been on a bull run throughout the first quarter of 2019, analysts predict a tough earnings season. Despite the positive results seen in the stock market, the general consensus among analysts is that many major companies will show disappointing figures when the season kicks off on Friday, April 12th.

Entering this earnings season, many companies face the challenge of remaining a lucrative investment option for their shareholders. For some companies in the financial sector, the challenge could be quite substantial, as disappointing results this season could overshadow the positive performance of their stocks in Q4 of last year.

Banking on earnings

The last time around, the majority of big banks showed an impressive performance, closing out 2018 with positive results. The two largest financial firms to release reports on Friday are JPMorgan Chase and Wells Fargo.

JPMorgan Chase closed out 2018 with a bang, as earnings for the final quarter of last year hit a new record. Despite a decline in revenues and profits in its investment banking business, the largest bank in the US has shown an increase of 4% in total net revenue year after year, posting a new record both for the final quarter and for its annual net profit.

Wells Fargo declined in profits as compared to 2017 Q4 results, but was still able to beat analysts’ predictions and post solid gains. Despite facing multiple scandals in 2018, the bank was able to keep its investors happy last year and show solid gains.

Next week, Citigroup, Goldman Sachs and Bank of America will also be sharing their earnings. Goldman Sachs showed impressive results in its last earnings release, posting earnings that beat analysts’ predictions by a significant margin, causing its stock to surge more than 9% following the release. Bank of America had a similar story, with its stock jumping 7% after results for Q4 of 2018 were released. In contrast, Citigroup posted weaker-than-expected results last time around, but was still able to show solid profits, giving its stock a 4% bump.

Investing in the financial sector on eToro

TheBigBanks CopyPortfolio is one of eToro’s first Market CopyPortfolios, offering investors a thematic investment opportunity in a fully allocated portfolio comprised of leading banks and financial institutions. TheBigBanks was created and is managed by eToro’s Investment Committee. The Portfolio is rebalanced periodically by the committee in an attempt to optimise performance.

The upcoming earnings season will no doubt impact markets, and since the financial sector is the first major segment to report, investors will be watching it closely over the coming weeks. To stay posted on recent and upcoming earnings reports, follow the eToro Earnings Reports Calendar.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

2077 views