With Bank Earnings On Deck, Here Are The 5 Names You Need To Watch This Week 1/13/15

On Monday Alcoa (AA) kicked off the 4th quarter earnings season by posting EPS of $0.33 and revenues of $6.4B, both beating the Estimize and Wall Street consensus estimates.  On the back half of this week the big banks kick things into high gear with 5 huge announcements.

Last quarter this group of 5 banks put up earnings growth of 24% and revenue growth of 5%, that narrative is changing a bit in the fourth quarter with negative earnings of -0.1% expected, and low sales growth of 2.7%. Deflated numbers are likely due to weakness in fixed income, currency and commodity (FICC) trading throughout the quarter due to extreme market volatility, low rates reducing interest revenues, further legal settlement costs and mixed housing data which continues to negatively impact lenders. Here’s what we’re anticipating to hear from the titan’s of the financial industry.

Wednesday

Wednesday morning JPMorgan Chase & Co. and Wells Fargo kick off earnings season for the major banks. JPMorgan (JPM) earnings are predicted to come in at $1.37 per share, 5 cents above the Wall Street consensus and 5% better than last year’s results. Wells Fargo is projected to report earnings of $1.03 per share, just a penny better than the Wall Street consensus and a 3% improvement year over year (YoY).

In addition to a 5% gain in earnings, contributing analysts are also looking for JPMorgan to boost its sales by 4% to $24.1 billion. Balancing out some of its moderate growth, JPMorgan has agreed to settle two large lawsuits this month. The first commits the bank to pay $100M in relation to allegations of foreign exchange rate rigging. The second agreement will settle a $500M class action suit tied to the sale of toxic mortgage-back securities sold by Bear Stearns which JPMorgan acquired during the financial crisis.

Analysts on Estimize are looking for Wells Fargo (WFC) to grow its revenue by a slightly more modest 3%. The country’s largest mortgage lender, which is often seen as a bellwether for the housing market, struggled in 2014 with mortgage originations. In Q1 they funded $36M worth of mortgages, the lowest amount since acquiring Wachovia in 2008, and that number only increased to $47M in Q2 and $48M in the most recent quarter. Despite a brightening consumer picture and low interest rates, housing data remained mixed for much of Q4, so any improvement in mortgage lending for the bank may be modest.