Shortly after Wednesday’s opening bell, the Dow traded up 0.48%, the S&P 500 up 0.57% and the Nasdaq 0.77% higher. The March consumer price index report shaved another half point from the year-over-year rate, from 5.5% in February to 5.0% last month. The numbers are raising hopes of an easing of the Federal Reserve’s rate hikes. The next Federal Open Market Committee meeting begins May 2.
No notable earnings reports were released after markets closed Tuesday or before they opened on Wednesday.
First thing Thursday morning, Delta Air Lines, Infosys and Progressive are expected to post their quarterly results.
Here are previews of three of the nation’s largest banks, all on deck to report quarterly results before U.S. markets open on Friday.
Citigroup
The fifth-largest U.S. bank (by market cap), Citigroup Inc. (NYSE: C) stock has added about 4.7% to its share price over the past 12 months. Since March 9, the day that Silicon Valley Bank began to show signs of its impending failure, Citi stock has retreated by 7.6%, about in the middle of the losses posted since that date by the biggest U.S. banks.
The big question for banks heading into this earnings season is whether they can remain profitable in the face of slower lending growth, increased saving and higher credit costs. All these issues will affect share buybacks as well. Citi recently said it expected net interest income for the 2023 fiscal year to come in at around $45 billion, some $5 billion short of the consensus estimate.
Of 24 brokerages covering the company, nine have a Buy or Strong Buy rating and 14 have Hold ratings. At a recent price of around $47.20 a share, the upside potential based on a median price target of $53.00 is 12.3%. At the high price target of $75.00, the upside potential is about 58.9%.
First-quarter revenue is forecast at $20.09 billion, which would be up 11.6% sequentially and by 4.7% year over year. Adjusted earnings per share (EPS) are forecast at $1.68, up 44.7% sequentially but down 20.2% year over year. For the full 2023 fiscal year, analysts anticipate EPS of $5.90, down 17.1%, on revenue of $77.89 billion, up 3.4%.
Citigroup stock trades at 8.0 times expected 2023 EPS, 7.1 times estimated 2024 earnings of $6.67 and 6.2 times estimated 2025 earnings of $7.56. The stock’s 52-week trading range is $40.01 to $54.56, and Citi pays an annual dividend of $2.04 (yield of 4.39%). Its total return to shareholders for the past year was negative 2.66%.
JPMorgan
The largest (by market cap) of the big U.S. banks, JPMorgan Chase & Co. (NYSE: JPM) has seen a share price decline of about 3.4% over the past 12 months. Like the other big banks, JPMorgan posted a year-to-date low in late March, following the turmoil in the regional banking industry.
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