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How Investors Can Cash In on Bank Earnings



The list below cites those banks with the most potential for earnings surprises (up or down) this quarter with potential short-term options action are:

  1. JPMorgan Chase reported Friday, missing bottom-line estimates by 12 cents; earnings had been revised downward by 5% over the last 90 days
  2. Goldman Sachs -- Highest spread from best beat percentage to worst miss percentage (almost 500%); six of 11 quarterly estimates varied by more than +/- 20%
  3. Capital One -- Lowest percentage meet or beat estimates of the prior 11 quarters with 63.6%
  4. Morgan Stanley -- Highest number quarterly variances with eight of 11 quarters differing by more than +/- 20%
  5. Bank of America -- Highest downward percentage (83%) in 90 days revisions

The banks forecasted with the greatest opportunity for stock returns (and long-term holds) are:

  1. Citigroup: +54.4%
  2. JPMorgan Chase: +53.4%
  3. Goldman Sachs: +47.1%
  4. Capital One: +38.3%
  5. PNC Bank: +27.9%

The safest plays that are the least volatile and modest returns are:

  1. PNC Bank: +27.9% - Upside beat of 5.2%; with prior Q1 beats of 50%
  2. Wells Fargo: +27.0% - Upside beat of 2.2% with prior Q1 beats of 3.7%
  3. Fifth Third Bank (FITB): +21.8% - Average beat for all quarters was 16%
  4. BB&T: +16.9% - Less the 2% variance from analyst estimates over the last 11 quarters
  5. U.S. Bancorp: +15.5% - This bank had no earnings misses in the last 11 quarters, the only bank to do so.

At the time of publication the author had positions in BAC, C and WFC.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Gene Kirsch, independent senior banking analyst, genekirsch.net, has more than 20 years of financial industry experience in credit-risk portfolio management, lending and loan review analysis within various sized, regional credit unions, finance companies and banks at both the retail and commercial level.
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