Banking & Finance

Earnings Previews: Bank of America, Citigroup, BlackRock

The first big week of the new earnings season continues with several big companies reporting earnings before Thursday’s opening bell.

The first three of the country’s largest banks reported quarterly results Wednesday morning, and two more report on Thursday. The world’s largest asset manager also is scheduled to report Thursday morning.

Note that a major airline, a Dow 30 component, a specialty retailer and more are scheduled to report first thing Thursday as well.

Bank of America

Bank of America Corp. (NYSE: BAC) is usually the most heavily traded of all bank stocks, with a daily average of more than 54 million shares changing hands. Over the past 12 months, the stock has gained about 65%, and for the year to date, the stock is up more than 30%. Analysts are expecting the bank’s investment banking fees to boost first-quarter revenues and profits.

Analysts’ ratings on the stock are mostly positive with 22 of 30 ratings of Buy or Strong Buy, compared to seven Hold ratings and one Sell rating. The consensus price target on the stock is $40.90, and shares traded Tuesday at around $39.40, implying a potential 12-month upside of around 3.8%. At the high target of $50, the upside potential reaches 27%.

The bank is expected to report first-quarter earnings per share (EPS) of $0.66 on revenue of $22.13 billion. In the first quarter of last year, the company reported EPS of $0.40 and revenue of $22.91 billion.

The stock currently trades at around 15.3 times expected 2021 EPS, 13.3 times estimated 2022 EPS and 12 times estimated 2023 earnings. The stock’s 52-week trading range is $20.10 to $40.38, and the company pays an annual dividend of $0.72 (yield of 1.8%).

Citigroup

As the country’s fourth-largest bank, Citigroup Inc. (NYSE: C) has a market cap of more than $151 billion, less than half Bank of America’s value, and a third the size of leader JPMorgan. Over the past 12 months, Citigroup stock has added more than 57%, and the year-to-date gain is around 17%. Analysts will be paying close attention to the results, in no small part due to the first appearance of new CEO Jane Fraser at the quarterly dog-and-pony show.

Once again, analysts are mostly positive on the bank, with 17 of 29 sticking Buy or Strong Buy ratings, while 10 rate the stock a Hold. The 12-month price target on the stock is $84.12, and shares traded Tuesday at around $71.50, implying a potential upside of 17.6%. At the high target of $117, the potential upside is nearly 64%.

Citigroup is expected to report EPS of $2.60, up from $1.05 in the year-ago quarter. Revenues are forecast to reach $18.82 billion, about 9.2% below last year’s quarterly total.

The stock currently trades at around 9.6 times expected 2021 EPS, 8.6 times estimated 2022 EPS and 8.1 times estimated 2023 earnings. The stock’s 52-week range is $38.76 to $76.13, and the bank pays an annual dividend of $2.04 (yield of 2.8%).

BlackRock

Asset manager BlackRock Inc. (NYSE: BLK) had nearly $8.7 trillion in assets under management at the end of 2020. Only the United States and China have annual gross domestic product larger than BlackRock’s assets. In the past 12 months, the stock has added 74%, and since the beginning of 2021, shares have risen by about 12%. The firm launched two sustainable actively managed exchange-traded funds. Among the stocks that are underweight in the funds based on their size are Exxon Mobil and Costco. Major overweights are Medtronic and Kinder Morgan.

Twelve of 15 analysts have Buy or Strong Buy ratings on the stock, and the consensus price target on the shares is $859.29. At a current trading price around $801.70, the implied upside on the stock is around 7.2%. At the high target of $949, the implied upside is around 18.4%.

Analysts expect BlackRock to post EPS of $7.75 for the first quarter, on revenue of $4.26 billion. In the year-ago quarter, the firm reported $6.60 in EPS and $3.71 billion in revenue.

The shares currently trade at 21.9 times expected 2021 EPS, 19.3 times estimated 2022 earnings and 17.4 times estimated 2023 EPS. The stock’s 52-week range is $440.00 to $810.62. BlackRock pays an annual dividend of $16.52 (yield of 2.04%).