Financial Sector Seen Leading Fourth Quarter Earnings Growth
NEW YORK (TheStreet) --Bank of America (BAC), Citigroup (C) and JPMorgan Chase (JPM) are expected to lead the financial sector to 16.5% earnings growth in the fourth quarter--better than any other sector, according to an analysis of sell-side research by FactSet.
Those three banks alone will grow by a combined 54% in the fourth quarter, compared to the fourth quarter of 2011, according to consensus estimates. Tipping the scales is Citigroup, which is expected to see its earnings growth by 163.6% after it posted earnings of just 30 cents per share in the fourth quarter of 2011. Bank of America and JPMorgan are expected to show growth of 26.9% and 35.6%, respectively.
Maybe even more significant, the financial sector is supposed to show "modest" revenue growth "for the first time in several quarters." That data will be encouraging to skeptics who attributed much of the financial sector growth since the crisis to the "release" of reserves set aside to cover bad loans.
Analysts expect 7% revenue growth for the financial sector, including 13% growth at JPMorgan and 12% at Citigroup.
The bullish numbers are consistent with strong gains in financial sector stocks in 2012. Bank of America shares have more than doubled this year, while Citigroup shares are up 50% and JPMorgan Chase--despite an embarrassing and costly multi-billion dollar trading blowup by a trader nicknamed "the London Whale," managed gains of nearly 32% with just a few trading days left in the year. Weighing down returns for the financial sector in the insurance industry, which as a result of Hurricane Sandy is expected to show very poor earnings compared to the fourth quarter of 2011. FactSet estimates insurance industry earnings will be 37.9% lower than they were a year ago. Excluding insurance, financial sector fourth quarter earnings would be up a whopping 42.9% versus the fourth quarter of 2011. -- Written by Dan Freed in New York. Follow @dan_freedSelect the service that is right for you!
COMPARE ALL SERVICESAction Alerts PLUS
TRY IT FREEJim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
Product Features:
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
TheStreet Quant Ratings
TRY IT FREENew! $49.95/yr
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
Product Features:
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Stocks Under $10
TRY IT FREEDavid Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
Product Features:
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
- Weekly roundups
Dividend Stock Advisor
TRY IT FREEJim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Product Features:
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
TRY IT FREEAll of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
Product Features:
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Options Profits
TRY IT FREEOur options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
Product Features:
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV
