Wells Fargo (WFC) kicked of financial earnings Friday, and it’s super busy in the sector this week with earnings due from Goldman Sachs (GS), J.P. Morgan Chase & Company (JPM), Bank of America (BAC) and Citigroup (C).
Fourth-quarter numbers from Wells Fargo looked pretty good on the surface, but Wall Street focused on the banks’ net interest margin — basically the difference between the interest rate received on interest-earnings assets (loans) and the interest rate paid on interest-earning liabilities (customer deposits). It came in at 3.56% versus 3.89% a year ago and 3.66% in the third quarter. Earnings and sales growth came in better than expected with quarterly profit up 25% from a year ago to $0.91 a share. Sales rose 6% to $21.9 billion.
Technically, Wells Fargo still looks solid. It’s been toying with a breakout over $35.19 — its December 18 intraday high — but hasn’t really gotten going yet. On Friday, the stock enjoyed a nice bounce off its 20-day simple moving average (SMA) after early weakness. It finished near its high for the session as big buyers came in late.
Here are some quick thoughts on other financials set to report this week.
Goldman Sachs: Earnings due Wednesday before the open (eps estimate +101% to $3.70 a share; sales +31% to $7.9 billion. Technical take: Stock is extended (too late buy) after recent breakout over $129.72. Wait for pullback. $129 looks like solid support level.
J.P. Morgan Chase & Company: Earnings due Wednesday before the open (eps estimate +30% to $1.17 a share; sales +10% to $24.4 billion). Technical take: Recent breakout over $44.54; not quite extended yet but wedging higher in light volume in recent days. Wait for pullback — expecting $44 to be solid support level.
Bank of America: Earnings due Thursday before the open (eps estimate -87% to $0.02 a share; sales -16% to $21 billion). Technical take: Extended after recent breakout over $10 but good supporting action at 20-day moving in recent days — not a buyer at current levels; could use more of a breather.
Citigroup: Earnings due Thursday before the open (eps estimate +210% to $0.96 a share; sales +10% to $18.8 billion). Technical take: Under accumulation more than the other three, but also extended after recent breakout over $39. Don’t chase. Support at $40.