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TheStreet Open House

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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