Earnings Previews: Bank of America, BNY Mellon, Citigroup, JPMorgan, Wells Fargo

At the sound of the bell Wednesday morning, the three major stock indexes opened higher.

Later in the morning, the Energy Information Administration will issue its weekly report on petroleum inventories. We took a look at this in our Before the Bell report earlier in the morning.

The Bureau of Labor Statistics reports December’s consumer price index (CPI) before markets open on Thursday. The consensus estimate calls for no increase in CPI but a jump of 0.3% in core CPI.

After U.S. markets close Wednesday and before they open on Thursday, KB Home and Taiwan Semiconductor are on deck to report quarterly results.

This episode of earnings season gets underway with a bang before markets open on Friday. Four of the nation’s biggest banks will report quarterly results, along with one major airline, the country’s second-largest health care company and the world’s largest asset management company

Here is a preview of what to expect when the big banks report results Friday morning.

Bank of America

Shares of Bank of America Corp. (NYSE: BAC) have dropped by about 30% over the past 12 months. The good news for the bank and for its peers is that share prices have improved over the past three months. BofA’s stock has posted a three-month gain of more than 11%, thanks to higher interest rates and, recently, more borrowing.

Unlike some of its peers, BofA has not announced a layoff, instead choosing to let positions left open by normal attrition remain unfilled. In a normal year, that amounts to about 8% of the bank’s workforce. High interest rates will help fill the void left by lower investment banking activity but will not completely close the gap.

Analysts are moderately bullish on BofA, with 14 of 27 having a Buy or Strong Buy rating. The rest rate the stock at Hold. At a recent share price of around $34.10, the implied gain based on a median price target of $40.00 is 17.3%. At the high price target of $52.00, the implied upside is about 52.5%.

Fourth-quarter revenue is forecast at $24.22 billion, which would be down 1.1% sequentially but up by 8.9% year over year. Adjusted earnings per share (EPS) are expected to come in at $0.77, down 5.1% sequentially and by 6.1% year over year. For the full 2022 fiscal year, analysts forecast EPS of $3.14, down 12%, on revenue of $94.75 billion, up about 6.3%.

BofA’s stock trades at 10.9 times expected 2022 EPS, 9.5 times estimated 2023 earnings of $3.60 and 8.9 times estimated 2024 earnings of $3.84 per share. The stock’s 52-week trading range is $29.48 to $50.11. The low was posted Wednesday. BofA pays an annual dividend of $0.88 (yield of 2.56%). Total shareholder return for the past 12 months was negative 28.6%.

Bank of New York Mellon

Bank of New York Mellon Corp. (NYSE: BK) has dropped more than 13% from its share price over the past 12 months. Like BofA, the bank posted a new 52-week low in early October. The stock price has jumped by more than 22% since then.

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