Analysts surveyed by Thomson Financial expect JP Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) to post smaller profits in the first quarter. Both banks are scheduled to report results on Wednesday.
JP Morgan is expected to earn 65 cents per share, which is down 51% from the same period in 2007 when it earned $1.34. The company has tended to beat quarterly estimates recently. However, it fell short of the consensus fourth-quarter 2007 estimate by six cents, or 6.8%.
New York-based JP Morgan is the third largest financial services firm in the U.S, behind Citigroup (NYSE: C) and Bank of America (NYSE: BAC), and recently agreed to buy Bear Stearns (NYSE: BSC). In the past year, JP Morgan's revenues were $116.3 billion and its net income totaled $15.3 billion. Its EPS growth forecast for the year is -23.4%, much worse than the banking industry average and the S&P 500. Yet the consensus recommendation of analysts is to buy JPM and has been for most of the past three months.
The stock has fallen 15.5% in the past year and trades at a P/E of 9.47. Shares closed Monday at $41.50.
Wells Fargo is expected to earn 57 cents per share, 13.6% less than in the same period in 2007 when it earned 66 cents. While the company has tended to beat quarterly estimates, in the third quarter of 2007, it missed the consensus estimate by 8%, but in the fourth quarter EPS were in line with expectations.
San Francisco-based Wells Fargo is a leading residential mortgage lender in the U.S., as well as one of the largest mortgage servicers. In the past year, its revenues were $54.4 billion and its net income totaled $8 billion. Its EPS growth forecast for the year is only 1.7%, but that's still better than both the banking industry average and the S&P 500. The consensus recommendation of analysts has been to hold WFC for the past 90 days.
The stock has fallen 21.4% in the past year and trades at a P/E of 11.4. Shares closed Monday at $27.20.
For more on the big banks reporting this week, see Q1 expectations for big banks look familiar.
Closing Bell: When you are just glad the closing bell came (AIG, DELL, GMGMQ, CSCO, POT)
Biotech ETFs: Best bets on health care reform
Cramer on BloggingStocks: The world's been waiting for the new GM 
