Investors in American banks have good reason to mark this Friday, Jan. 13, on their calendars.
That is the day that some of the biggest players in the industry are scheduled to release quarterly results.
So what should investors expect from three of the biggest U.S. banking stocks, and do they stand to profit? Let's take a look.
For the fourth quarter, the bank is expected to report earnings of 38 cents a share, compared with 27 cents a year earlier, which would represent a 40.7% increase. That is by far one of the strongest growth rates for any bank, big or small.
BofA is projected to bring in revenue of as much as $20.96 billion, which would be a 7.2% year increase from a year earlier. Although the bank doesn't expect an immediate economic upswing, there are a number of possible short-term effects such as a drop in corporate taxes, greater capital returns and an outsize benefit relative to smaller banks.
However, investors should consider this bank stock for the long term.
The bank is expected to post fourth-quarter earnings of $1.43 a share, compared with $1.32 a year earlier, an increase of 8.3%. Like BofA, JPMorgan Chase is expected to show organic growth, and the bank has also delivered an earnings surprise in the past four quarters.
But JPMorgan Chase is expected to post revenue of about $23.95 billion, basically unchanged from $23.75 billion a year earlier.
However, there are some factors that could boost this banking behemoth. The incoming Trump administration and its expected loosening of regulations could be a major tailwind.
Investors will also be looking to the special dividend that JPMorgan Chase Chief Executive James Dimon mentioned at a Goldman Sachs conference last month.
JPMorgan shares, which trade at an expensive 1.36 times the price-book ratio, offer a 2.2% dividend yield.
And like BofA, JPMorgan Chase shares are already slightly ahead of analysts' 12-month price targets, which means an earnings miss could lead to a sell-off.
However, there is still value in this bank stock for long-term investors.
However, the headline risk for this $277 billion bank has been reduced considerably.
Analysts and investors are waiting for Wells Fargo to revive its business. New Chief Executive Tim Sloan must address growth concerns while also dealing with litigation and the blow to the bank's reputation.
Wells Fargo's share price has risen since Donald Trump was elected president.
Trading at an expensive price-book ratio of more than 1.5 times, there is little wiggle room for any disappointment. Investors may want to be more cautious toward Wells Fargo than its other banking brethren.
Wells Fargo is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells WFC? Learn more now.
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