The quarterly earnings season has officially opened up, and we are ready for it.
The season kicked off with most of the biggest names in finance exceeding expectations.
Today, I’ll look at earnings reports scheduled for next week.
However, before the “bullish” and “bearish” earnings calls for next week, let me reflect on something I mentioned last week…
Trade Desks Do Carry Big Banks
Last week, banks dominated both our “bullish” and “bearish” lists… which makes sense since financials kicked off this next earnings season.
Our lists varied, with big banks like Citigroup Inc. (C), The Charles Schwab Corp. (SCHW) and Bank of America Corp. (BAC) among the nine stocks our screener identified as having “bullish” earnings estimates.
In addition to having more diversified revenue streams and stronger loan growth than their smaller counterparts, I made this observation about why these big banks were expected to beat earnings:
Most notably, these larger banks have trading desks that serve institutional and retail investors. They make money on every trade they execute.
That trading desk income has been a big reason why larger banks are projected to see increases in EPS.
This quarter won’t be any different, as I project the five large banks that made our “bullish” list will meet or beat EPS expectations for the second quarter.
Turns out, that was a good call.
Citigroup reported actual earnings per share (EPS) of $3.06, well above the $2.63 Wall Street estimate. It was the same for The Charles Schwab Corp. ($1.43 actual compared with $1.38 estimated) and Bank of America Corp. ($1.11 actual compared with $1.01 estimated).
It’s not that the smaller banks on our “bearish” list didn’t do well. However, they simply couldn’t keep pace with these more diversified big banks.
Now, let’s dive into next week’s “bullish” earnings…
“Bullish” Earnings to Watch
These stocks are expected to beat their EPS from the previous quarter. And if those expectations are met or exceeded, they could potentially trade higher.
For this screen, stocks must meet four criteria:
- 10 or more analysts cover the stock.
- The average analyst recommendation is a “Buy.”
- It BEAT analysts’ EPS estimates for the previous quarter.
- The average analyst estimate for the current quarter’s EPS is greater than the previous one.
Here are 10 companies that made this week’s list:
It may not be the most sexy name on the list… not that any of these are… but Newmont Corp. (NEM) is one to highlight.
The gold, copper, silver, lead and zinc miner traditionally relies on the price of the metal it brings up to determine potential profits.
The good news is , despite a steep decline in March, gold remains above $4,800 per ounce… and looks poised to climb.
The even better news for Newmont is that, during the first quarter of the year, gold roared to all-time highs, spelling good news for the company’s earnings.
If the estimate holds, it will mark the miner’s ninth consecutive quarter of positive earnings.
Newmont will benefit from strong gold prices, which I expect will drive an EPS uptick this quarter.
Beating EPS estimates will certainly help strengthen Newmont’s “Strong Bullish” position on Adam’s Green Zone Power Ratings system.
Now, let’s look at potentially “bearish” earnings for next week…
“Bearish” Earnings to Watch
For our “bearish” earnings screen, we’re only looking for two things:
- 10 or more analysts must cover the stock.
- The average analyst estimate for the current quarter’s EPS is less than the previous quarter’s.
We want companies that are covered by a sufficiently large group of Wall Street analysts who collectively expect the company to report a quarter-over-quarter decline in earnings.
Here are 10 companies that passed this screen:
Man, has it been a tough road for The Boeing Co. (BA).
Aircraft production issues – leading to a cap on the number of 737 Max jets the company can produce per month – and issues with its Starliner space capsule continue to mount pressure on the manufacturing giant.
On top of that, analysts continue to lower earnings and revenue estimates, signaling potential volatility moving forward.
Despite issues with aircraft production and space capsule delays in recent years, those problems still plague Boeing today.
The fourth quarter was the first positive EPS quarter for Boeing since 2022. I suspect the company may report positive EPS this quarter, but it will likely be in line or even below Wall Street estimates.
If that’s the case, look for its already “bearish” overall rating on Adam’s Green Zone Power Ratings system to slip even lower.
Regardless, it should be another interesting week of earnings.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets
P.S. The next wave of earnings could be where everything changes. On the surface, the numbers from major legacy players may look routine — but underneath, capital is already moving in a very different direction.
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