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Earnings Preview – BAC, MS, GS
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January 19, 2010
BY Momei Qu:
Contributor, Stock Traders Daily
Real Time Trading Reports: Included are detailed trading reports designed to help investors realize opportunities in these companies. The reports are linked to the stock symbols in the article below.
(La Jolla, CA) Following JP Morgan’s announcement Friday and Citigroup’s announcement Tuesday, three other major banks are scheduled to report 4Q results later this week. Although JP Morgan beat consensus estimates with 74 cents per share in profits, the results were viewed as moderately disappointing to due decreased fixed income revenues and losses from its credit card division. Citigroup reported a loss of $7.6 billion Tuesday, or 33 cents a share, in line with expectations, also suffering from credit losses as well as the TARP repayment. As we will see, these issues will continue to manifest themselves within Bank of America, Morgan Stanley, and Goldman Sac
Bank of America (NYSE: BAC) is expected to report a loss per share of 51 cents Wednesday on $27 billion in revenues. Although overall market improvement was favorable to the bank, its earnings are also affected by large credit losses. In addition, overall fees in mortgage banking and revenues from trading are both expected to decline. Bank of America’s shares closed at $16.26 Monday. After rebounding from its 52 week low of $2.53 per share, the bank’s stock price has been stagnant around $17 per share. To find out if BAC is capable of reaching new highs, download our free BAC trading report.
Morgan Stanley (NYSE: MS) is also scheduled to report earnings Wednesday. Analysts are estimating a profit of 41 cents per share on $8 billion revenues. The bank saw strong results from its merger advisory business, but like JP Morgan, it saw decreases in fixed income trading due to tightening spreads. Wall Street is optimistic about Morgan Stanley’s 2010 prospects however, citing that a new CEO and favorable trends in investment banking and prime brokerage could spell a “turning point” for the bank. With the recent drop in stock price (Morgan Stanley’s shares closed at $30.38 Monday), this could be an opportune time to invest. To learn more about the risks and rewards of investing in Morgan Stanley, download our free MS trading report.
On Thursday we expect to see Goldman Sachs (NYSE: GS) post a $5.25 per share profit on $9.9 billion in revenues. The bank continues to benefit from its equity holdings as well as its investment banking business. Rebounding merger and equity activity is supposed to bring the bank even more revenues than last quarter. One area that could affect earnings (and bring negative attention) is compensation expense. Goldman is expected to pay out high bonuses to employees for a profitable year. Goldman’s shares closed at $165.21 Friday. Our free GS trading report can provide more insight on investing in Goldman.
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