US earnings preview: Citigroup, Goldman Sachs, JPMorgan, and more

The first wave of US earnings season is here, with several top firms set to report their financial results in the coming days.

S&P 500 companies reporting this week include: Bank of America Corporation, Citigroup, Delta Air Lines, JPMorgan Chase & Co., Morgan Stanley, and Goldman Sachs Group.

According to FactSet, the S&P 500’s estimated earnings decline for Q4 2019 is two percent, which would mark the first time it has reported four straight quarters of year-over-year earnings declines since Q3 2015.

Still, IG Asia Market Strategist Jingyi Pan says it should be noted that ‘the number of companies that have issued positive earnings per share (guidance) is slightly above the five-year average’.

What can investors expect from upcoming earnings?

Below are analyst predictions of key company’s quarterly results and earnings per share (EPS) ahead of the earnings report.

Bank of America Corp – 15 January

Wall Street Journal analysts have given an average forecast of US$0.69 for EPS for the bank’s Q4 update, as compared to an estimate of US$0.54 for the previous quarter.

Traders polled by CNN Business are also anticipating sales in Q4 to drop by US$0.6 billion to US$22.2 billion, as a result of lower loans and deposits, asset management fees, investment banking fees, and leasing-related revenues.

Shares closed at US$34.74 per share at the close of last week, representing a 1.36% decline year-to-date. The median price forecast for Bank of America Corp stocks stands at US$37.50 per share.

Citigroup Inc (NYSE: C) – 14 January

Analysts polled by CNN Business have given the investment banking firm a sales range forecast for Q4 of between US$17.2 billion and US$18.5 billion, with a consensus estimate of US$17.9 billion.

In terms of EPS, the consensus estimate is US$1.82 per share.

As of 13 January, 19 out of 26 analysts gave Citigroup Inc stock a ‘buy’ rating.

The 24 analysts offering 12-month share price predictions for the company have a median price target of US$89. This is a 12.3% increase from the last traded price of US$79.25 on Friday, 10 January, and a year-to-date drop of 0.8%.

Delta Air Lines Inc (NYSE: DAL) – 14 January

Delta Air Lines Inc (All Sessions) has an EPS consensus estimate of US$1.40 per share, on the back of a net sales forecast of US$11.3 billion for the last quarter of 2019.

The airline’s stock received a ‘buy’ rating on an average 12-month price target of US$65 per share from 19 analysts polled by CNN Business.

On an annual basis, Delta is forecasting a yearly profit of US$6.75 to US$7.75 per share, versus a mean estimate of US$7.01 on CNN.

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Goldman Sachs Group Inc (NYSE: GS) – 15 January

According to Zacks Investment Research, based on five analysts' predictions, the consensus EPS forecast for the quarter is US$5.18. The reported EPS for the same quarter last year was US$6.04.

Analysts are also anticipating a Q4 revenue of US$8.5 billion, a slight increase of Q3’s reported sales of US$8.3 billion.

Starting with Q4 results, the company will categorise earnings into four segments, namely Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management.

Goldman Sachs Group hopes the new changes will bring more transparency and help to boost its share price, which has been trailing those of JPMorgan and Bank of America Corp in recent years.

JPMorgan Chase & Co (NYSE: JPM) – 14 January

The financial services firm has received a ‘hold’ rating and an average price target of US$137.24 on its equity from 14 out of 26 analysts surveyed by Wall Street Journal.

JPMorgan Chase & Co's share price has been on a slight downward slope since the start of the year, falling 3.6% to its current level of US$136.07 per share.

The same survey also revealed a US$2.35 earnings per share consensus for 2019’s final quarter, although analyst estimates for the first three quarters of the year have been off by between nine to 13 percent.

Morgan Stanley (NYSE: MS) – 16 January

Morgan Stanley has seen share price increased 2.13% so far this year, despite reports of layoffs last December.

Analysts surveyed by CNN Business predicted a sales total of US$9.7 billion for Q4, alongside an average EPS of US$1.03.

Comparatively, net sales for Q3 FY2019 increased by US$0.1 billion year-on-year, which surpassed analyst estimates by US$0.4 billion.

In terms of investment recommendations, the company currently has a ‘buy’ rating from 18 out of 27 traders on a median price target of US$57 per share. This would represent a 9.17% increase from last week’s closing mark of US$52.21.

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