Bank On JPMorgan and Wells Fargo

NEW YORK ( TheStreet) -- There's nothing that gets investors more anxious than earnings season. This is a time when expectations are either confirmed or turned away. Most important, investors look for hints they have made the right buy/sell decisions.

Here's a look at three companies that might have had you wondering.

JPMorgan Chase (JPM): After several years of banking dangerously, CEO Jamie Dimon is working to get the business back on the "right track." I say "right track" because despite some dings to JPMorgan's image, the bank has never lost sight of the things that really matter. The bank still churns out money left and right. Investors want assurances that this will continue.

The bank will report first-quarter earnings Friday and analysts seem a bit more optimistic about JPMorgan's prospects, even though profits are expected to decline 11% to $1.41 per share. For the fiscal year, analysts are expecting earnings of $5.90 per share.

Likewise, revenue is expected to fall 11% in the quarter to $24.56 billion. This is expected to culminate in full-year revenue of $99.61 billion. But after a 8% drop in revenue in the January quarter and an 8% drop in the quarter before that, investors understand the weak interest rate environment has taken a toll on all banks. Not just JPMorgan.

But, as noted, the core business remains intact. JPMorgan has figured out ways to boost its balance sheet to over $2.4 trillion, up more than 2%. More importantly, on Friday, investors should want to see that JPMorgan is able to show strong growth in key areas such as mortgage loan origination and overall loan growth.

As it stands, of analysts that cover JPMorgan, 77% of them have a buy rating. This is because in absolute terms, the bank's results continue to standout. And on the basis of improved earnings and cash flow growth, I project fair market value to reach $65 by the second half of the year.

Wells Fargo (WFC): This is the complete opposite of JPMorgan. I don't believe a safer bank exists that still have the size and scale of Wells Fargo. Although there has been grumblings about slowing growth, in areas such as mortgage lending, which has been the bank's biggest area of strength, Wells Fargo's performance hasn't been that bad.

But this fact has been a hard sell to a fickle market. Investors were spooked by last quarter's double-digit sequential decline in loan originations. So management has it work cut out. As with JPMorgan, Wells Fargo will report first-quarter earnings Friday, and investors will look for assurances that this is a company they can still bank on.

The Street will be looking for a profit of 97 cents per share, which would represent a 5.4% increase on a year over year basis. Over the past three months, the consensus estimate has risen from 94 cents. For the full year, analysts are projecting earnings of $4.05 per share. So it's encouraging that analysts have grown more optimistic about the bank's performance.

Revenue is expected to drop 8%, however. Analysts expect the number to come in at $20.60 billion. For the year, revenue is expected to come in at $84.28 billion. But through diligent cost-controls, Wells Fargo is expected to make up this shortfall in earnings.

The company has posted increasing profit for three straight quarters. And from my vantage point, given the overall growth struggles in the industry, profits is the only metric investors should bank on in the near term. And there's no other bank that does it better.

Fastenal (FAST): A company I've always wanted to like but just can't. Fastenal sports a strong balance sheet -- one that is also very clean, which leaves management with plenty of growth options at their disposal. Even so, the stock has always been expensive. On Friday, management will have a chance to prove that valuation is deserved.

The Street will be looking for 37 cents in earnings per share on revenue of $870 million, which represents 8% year over year revenue growth. Analysts have grown a bit pessimistic, however. Earnings estimates are down 4 cents over the past 90 days. For the fiscal year, analysts are expecting earnings of $1.67 per share. Full-year revenue is expected to come in at $3.68 billion.

A surprisingly healthy U.S. manufacturing sector has lifted valuations across the entire sector. But it didn't help Fastenal in the most recent quarter. The company posted a 9% profit decline. From an investment perspective, the P/E of 33, which is twice the industry average, has not been rewarded with the earnings investors expect. And I don't believe now is the time to buy the stock.

At the time of publication, the author didn't hold any stock in the companies mentioned.

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

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