NEW YORK (TheStreet) -- Should investors buy bank stocks this week as the nation's biggest lenders report results? According to TheStreet Ratings, TheStreet's proprietary ratings tool, the answer is, "yes."

J.P. Morgan Chase (JPM) shares were trading higher after the bank reported a profit of $5.91 billion, or $1.45 a share, surpassing analysts' expectations of $1.39 a share for the first quarter. The results were fueled by strong trading results. Shares of Wells Fargo (WFC) on the other hand, were trading down after the nation's fourth largest bank reported a rare profit decline. Wall Street didn't like the results despite Wells Fargo handily beating analyst expectations, reporting a profit of $5.8 billion, or $1.04 a share, up from an expected 98 cents a share.

Jim Cramer's charitable trust Action Alerts PLUS owns shares of Wells Fargo. "We appreciate just how clean a quarter Wells reported," according to a note by Cramer and his co-portfolio manager Jack Mohr.

According to TheStreet Ratings, both stocks are rated as "buy," according April 12 reports, the most recent reports available.

Next up is Bank of America (BAC) and U.S. Bancorp (USB) reporting earnings on Wednesday. Citigroup (C) and Goldman Sachs (GS) report on Thursday. Check out how TheStreet Ratings views these four bank stocks. And when you're done be sure to read about which three regional banks to buy now.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. Note: Reports are dated Apr. 12, 2015. Year-to-date returns are based on April 13, 2015 closing prices.


JPM Chart JPM data by YCharts

1. J.P. Morgan Chase (JPM)
Market Cap: $230.5 billion
Rating: Buy, A
Year-to-date return: -0.81%

JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. The company operates through four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset Management.

"We rate JPMORGAN CHASE & CO (JPM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, notable return on equity and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 504.41% to $28,746.00 million when compared to the same quarter last year. In addition, JPMORGAN CHASE & CO has also vastly surpassed the industry average cash flow growth rate of 318.99%.
  • The gross profit margin for JPMORGAN CHASE & CO is currently very high, coming in at 88.82%. Regardless of JPM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JPM's net profit margin of 20.20% significantly outperformed against the industry.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, JPMORGAN CHASE & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • JPMORGAN CHASE & CO's earnings per share declined by 8.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JPMORGAN CHASE & CO increased its bottom line by earning $5.29 versus $4.32 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus $5.29).
  • JPM, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

 

WFC Chart WFC data by YCharts

2. Wells Fargo & Co. (WFC)
Market Cap: $281.3 billion

Rating: Buy, A
Year-to-date return: -0.41%

Wells Fargo & Company provides retail, commercial, and corporate banking services to individuals, businesses, and institutions.

"We rate WELLS FARGO & CO (WFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, increase in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WFC's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 1.8% when compared to the same quarter one year prior, going from $5,610.00 million to $5,709.00 million.
  • WELLS FARGO & CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $4.10 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($4.15 versus $4.10).
  • The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 93.37%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WFC's net profit margin of 25.43% significantly outperformed against the industry.

 

BAC Chart BAC data by YCharts

3. Bank of America Corp. (BAC)
Market Cap: $166.2 billion

Rating: Buy, B-
Year-to-date return: -11.7%

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, large corporations, and governments worldwide.

"We rate BANK OF AMERICA CORP (BAC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 87.12%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.35% is above that of the industry average.
  • BANK OF AMERICA CORP's earnings per share declined by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BANK OF AMERICA CORP reported lower earnings of $0.35 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $0.35).
  • BAC, with its decline in revenue, underperformed when compared the industry average of 1.6%. Since the same quarter one year prior, revenues fell by 13.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income has decreased by 11.3% when compared to the same quarter one year ago, dropping from $3,439.00 million to $3,050.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, BANK OF AMERICA CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.

 

USB Chart USB data by YCharts

4. U.S. Bancorp (USB)
Market Cap: $78.5 billion

Rating: Buy, A
Year-to-date return: -1.9%

U.S. Bancorp, a financial services holding company, provides a range of financial services in the United States.

TheStreet Ratings team rates U S BANCORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate U S BANCORP (USB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • USB's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for U S BANCORP is currently very high, coming in at 88.19%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.19% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 2.2% when compared to the same quarter one year prior, going from $1,456.00 million to $1,488.00 million.
  • U S BANCORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, U S BANCORP increased its bottom line by earning $3.08 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($3.26 versus $3.08).
  • In its most recent trading session, USB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

 

C Chart C data by YCharts

5. Citigroup Inc. (C)
Market Cap: $159.8 billion

Rating: Hold, C+
Year-to-date return: -0.26%

Citigroup Inc., a diversified financial services holding company, provides various financial products and services for consumers, corporations, governments, and institutions worldwide.

"We rate CITIGROUP INC (C) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 1537.12% to $27,291.00 million when compared to the same quarter last year. In addition, CITIGROUP INC has also vastly surpassed the industry average cash flow growth rate of 318.99%.
  • C, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CITIGROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CITIGROUP INC is rather low; currently it is at 22.63%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.66% trails that of the industry average.

 

 

GS Chart GS data by YCharts

6. The Goldman Sachs Group (GS)
Market Cap: $88.3 billion

Rating: Buy, A-
Year-to-date return: 0.90%

The Goldman Sachs Group, Inc. operates as an investment banking, securities, and investment management company worldwide. The company operates through four segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management.

"We rate GOLDMAN SACHS GROUP INC (GS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for GOLDMAN SACHS GROUP INC is rather high; currently it is at 52.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.49% is above that of the industry average.
  • Net operating cash flow has significantly increased by 117.89% to $4,968.00 million when compared to the same quarter last year. In addition, GOLDMAN SACHS GROUP INC has also vastly surpassed the industry average cash flow growth rate of -34.43%.
  • GOLDMAN SACHS GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOLDMAN SACHS GROUP INC increased its bottom line by earning $17.07 versus $15.47 in the prior year. This year, the market expects an improvement in earnings ($17.20 versus $17.07).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

 

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