To The Moon

U.S. stock banking stocks are about to kick off the U.S. stock market earnings season. $JPMorgan Chase(JPM)$ and $Morgan Stanley(MS)$ will release earnings on Thursday, Eastern Time, and banks such as $Wells Fargo(WFC)$ and $Citigroup(C)$ will release their results on Friday. Elsewhere, $Pepsi(PEP)$ , $Delta Air Lines(DAL)$, insurance giant $UnitedHealth(UNH)$ and $Taiwan Semiconductor Manufacturing(TSM)$ will report quarterly results on Tuesday, Wednesday and Thursday, respectively.

Source：businessinsider.com

Source：businessinsider.com

Source：businessinsider.com

$JPMorgan Chase(JPM)$ will announce its second quarter figures on 14 July.

The bank announced its first quarter numbers in April and even though the main metrics were pretty good, there were some concerns about the outlook. In the three-month period, revenue cooled by 5% to $31.59 billion, beating the $30.86 billion forecast. Earnings per share came in at $2.76, ahead of the $2.69 estimate. Fixed income and equities trading revenue were $5.7 billion and $3.1 billion respectively, both easily beating analysts’ forecasts. The tick up in bond yields is helping the group as net interest income – the lending margin – rose by 7% to $13.97 billion.

There are creeping concerns the US economy could be edging towards a recession, and should that be the case, the bank could face problems like, a spike in bad debts, a fall IPOs and a drop in mergers and acquisitions.

"This year was supposed to benefit banks with economic recovery, but the Fed's rate rise regime to suppress inflation has hurt investor and borrower sentiment," says CFRA Research analyst Kenneth Leon. 

"Q2 2022 results are poised to benefit from rising rates, continued loan growth and modest credit losses," says Piper Sandler analyst Jeffery Harte, who has an Overweight (Buy) rating on JPM. But, "investors are more focused on a potentially looming recession."

JPMorgan’s share price is in a downtrend and if the bearish move continues, it might find support at $105.60 or $100.00. If the stock rallies, it might encounter resistance at $120.51 or $129.40.

$Morgan Stanley(MS)$ will reports Q2 earnings before the market opens on July 14th

Investors should pay attention to management guidance and the analyst Q&A, and look for new information on loan loss reserves, interest rates, and management's insight into where the U.S. and global economies are headed.

The big news on Morgan Stanley lately was that they passed the Fed's latest stress test with flying colors, and were able to raise the quarterly dividend to $0.775 per share and announce a $20 billion buyback. The bank's acquisition of E-trade gives them access to a variable rate margin loan book paying them up to 10% and the potential to benefit from increased trading fees in a market selloff.

MS stock trades for 9.6x 2023 earnings estimates. That's cheap. Interestingly, there are actually quite a few companies trading for single-digit P/E ratios right now: $iShares U.S. Home Construction ETF(ITB)$ , automakers like $Ford(F)$ , shipping stocks like $ZIM Integrated Shipping Services Ltd.(ZIM)$, and oil stocks like $Exxon Mobil(XOM)$ . Historically, when stocks in cyclical industries trade for low P/E ratios they can be value traps because the rosy earnings estimates will never be hit. Whether these low P/E stocks are a great buy for investors or a gigantic trap is one of the most vexing questions in the market today.

$Wells Fargo(WFC)$ is slated to announce Q2 2022 results, before the opening bell, on Jul 15.

The company’s earnings and revenues are expected to have declined year over year. Over the trailing four quarters, Wells Fargo’s earnings surpassed the consensus estimate on all four occasions, the surprise being 23.5%, on average.

Below are somer factors that are expected to have influenced Wells Fargo’s second-quarter earnings.

Loans and NII: In the second quarter, lending activity improved sequentially. This is likely to have been a tailwind for Wells Fargo,

Mortgage Banking Revenues: Mortgage originations, both purchase and refinancing, continued to normalize in the second quarter.

Overall Non-Interest Revenues: Wells Fargo’s investment advisory and other asset-based fee revenues are likely to have borne the brunt of the continued weaker equity market performance in the quarter.

Expenses: Wells Fargo’s costs are expected to have continued to flare up in the second quarter, given its franchise investments in technology and digitalization efforts.

$Citigroup(C)$ is scheduled to report Q2 2022 results on Jul 15, before market open.

Citigroup While the company’s earnings are expected to have witnessed a year-over-year decline, its revenues are likely to have increased. 

The Zacks Consensus Estimate for the company’s average interest-earning assets is pegged at $2.19 billion, suggesting a 3.3% increase from the prior quarter’s reported figure. Management expects a 55% year-over-year slump in its IB revenues in the second quarter. The bank expects a 25% year-over-year boost in its Fixed Income, Currency and Commodities (FICC) trading revenues in the second quarter.

In addition, there are some other companies outlook for Q2:

$Pepsi(PEP)$ is scheduled to announce Q2 earnings results on Tuesday, July 12th, before market open. The consensus EPS Estimate is $1.74 (+1.2% Y/Y) and the consensus Revenue Estimate is $19.51B (+1.5% Y/Y).

PepsiCo topped Q1 earnings estimates, led by a 13.7% rise in organic sales- up 22% in Latin America and 18% in the Africa, Middle East and South Asia region.

However, the F&B giant posted mixed guidance for the full year with full-year organic revenue to increase 8% vs. +6% prior view and +6.5% consensus.

Recent signs have pointed to robust sales for PEP’s key product. PepsiCo (PEP) is likely to push past earnings estimates for Q2 according to Morgan Stanley, with the the market expected to react favorably to a "solid topline and EPS beat, along with a reiteration of FY guidance".

$Bank of America(BAC)$ ,current price at $31.46, Bank of America is set to release second quarter (Q2) results for the fiscal year 2022 (FY22) on 18 July 2022. 

The Street’s expectations for the upcoming results are as follows: Revenue reach to $22.8 billion (+5.67% Y/Y); Earnings per share (EPS) will reach to $0.78 (-2.8% Y/Y).  Refinitiv data shows a consensus of (28) analyst ratings at ‘buy’ for BoA. A mean of estimates suggest a long-term share price target of $44.26 for the company.

$Taiwan Semiconductor Manufacturing(TSM)$ , one of the world’s largest chip makers, projected a 4% increase in its Q2 revenue, defying supply chain disruptions and challenges faced by the electronics industry.

TSMC, whose customers include the world’s biggest technology company, Apple, and Qualcomm, expects sales during the April-June period to reach between $17.6 billion and $18.2bn, matching the previous forecast issued by the company in April, it said on Friday.

Gross profit margin is expected to be between 56% and 58%, while operating profit margin is forecast to reach roughly 45% to 47%, TSMC said.

TSMC to report second-quarter earnings on July 14

$Gap(GPS)$ provided an update on its Q2 outlook. The company is expecting net sales in the Q2 fiscal 2022 to decline in the approximately high-single digit range, relatively in-line with its prior expectations. Gap also said it has taken a more aggressive approach to assortment balancing resulting in increased promotional activity during the quarter, which it expects will have a negative impact on gross margin in the quarter. Furthermore, the company now anticipates second-quarter fiscal 2022 adjusted operating margin percentage to be zero to slightly negative.

The company will report its second-quarter fiscal 2022 financials as well as its outlook when it reports second-quarter fiscal 2022 results on Thursday, August 25.

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