Goldman Sachs upgraded the banking sector last week, and this coming week we'll get a chance to see whether Goldman and other big banks reporting third quarter results will live up to the expectations of analysts surveyed by Thomson Reuters.
New York-based Goldman Sachs Group Inc. (NYSE: GS) looks set to be this week's earnings game winner. Analysts expect this dividend-paying company to report a third-quarter profit of $4.24 per share, which is 57.3% higher than in the same period of last year. Revenue for the period that ended in September is expected to be $11.0 billion. So far, the full-year forecast is for $17.74 per share on $44.6 billion.
Goldman Sachs earnings have been better than expected in four of the past five quarters, beating estimates by as much as $1.75 per share. The long-term EPS growth forecast is 12.5%, which is better than that of rival Morgan Stanley (NYSE: MS). Goldman Sachs's earnings multiple is 10x, and its net cash flow from operations swung into the black in the second quarter. The First Call consensus recommendation has been to buy GS for more than 90 days, and the mean price target is $202.52. The Motley Fool likes the prospects for higher dividends in the future. Shares have risen 33.4% in the past three months and reached a 52-week high of $192.17 last week.
JPMorgan Chase & Co. (NYSE: JPM) announced management changes and declared a quarterly dividend in its third quarter, and analysts are expecting it to report earnings of $0.49 per share, up from $0.11 per share in the same period a year ago. Revenue for the three months that ended in September is expected to be 68.3% higher to $24.8 billion. And analysts foresee sequential growth in both EPS and revenue in the fourth quarter. JPMorgan's earnings have beat the Street view in the past five quarters, topping estimates by 23 cents per share in the second quarter. The long-term EPS growth forecast is 12.0% and the earnings multiple is 19x. Short interest in JPM plunged in August, and its net cash flow from operations swung into the black in the second quarter. The consensus recommendation remains to buy JPM, with a mean price target of $48.89. Shares have risen 41.8% in the past three months to $45.85.
Bank of America Corp. (NYSE: BAC), on the other hand, is expected to report swinging to a third-quarter loss. Bank of America announced management changes in the three months ending in September, as well as the retirement of its CEO. Analysts are looking for a $0.05 per share net loss, compared to a $0.15 per share profit in the same quarter of last year. However, revenue is expected to be 27.9% higher to $2.0 billion. And for the full year, analysts expect to see a profit of $0.66 per share (+16.7%) on $124.2 billion (+70.7%). Earnings in the previous two quarters were better than expected. The long-term EPS growth forecast is only 7.7%, but the consensus recommendation is to buy BAC, and the mean price target is $19.60. TheStreet.com recently called it a winner in the financial sector. Shares are 147.9% higher than six months ago, but they have been stuck in the $16 to $18 range for the past couple of months.
Citigroup Inc. (NYSE: C) and First Horizon National Corp. (NYSE: FHN) are also expected to report losses for their third quarters, but narrower ones, year over year.
Analysts also expect Abbot Laboratories (NYSE: ABT) to report higher year-over-year earnings this week. For a third quarter during which Abbott announced acquisitions of Visiogen, Evalve, and Solvay pharmaceuticals, as well as its 343rd consecutive quarterly dividend, it is expected to post earnings up 12.2% from a year ago to $0.90 per share. Sales for the period that ended in September are expected to be 3.3% higher to $7.8 billion. So far, the full-year forecast is for $3.69 per share (+10.0%) on $30.5 billion (+3.1%). Abbott's earnings have met or beat the Street view in the past five quarters. Its long-term EPS growth forecast is 10.5%, which is better than that of competitor Merck & Co. (NYSE: MRK), and the earnings multiple is 12x. Analysts on average recommend buying ABT, and their mean price target is $55.27. The Motley Fool called it an unbelievably solid company and a stock begging to be bought. Abbott Labs shares have risen 10.3% in the past three months to $50.08, but they are still 6.2% lower than a year ago.
International Business Machines Corp. (NYSE: IBM) introduced the first public desktop cloud service and issued a corporate responsibility report during its third quarter. Analysts are looking for earnings 13.9% that are higher than a year ago to $2.38. But sales for the period that ended in September are expected to be 7.6% lower, or $23.4 billion. The full-year forecast is for $9.77 per share (+9.0%) on $94.9 billion (-8.5%). IBM has topped earnings estimates in the past five quarters, by as much as 30 cents per share. This dividend payer's earnings multiple is 12x and its long-term EPS growth forecast is 9.3%, which is better than that of Microsoft Corp. (NASDAQ: MSFT). IBM has had more cash on hand than long-term debt in recent quarters. The consensus recommendation remains to buy IBM, with a mean price target of $129.95; Zacks considers IBM a powerful buy. Shares have risen 24.9% in the past three months and reached a 52-week high of $126.00 on Friday.
Google Inc. (NASDAQ: GOOG) is expected to post earnings of $5.38 per share for the third quarter that saw the announcement of an acquistion, as well as increasing pressure from Microsoft's Bing. That profit is 8.6% higher than a year ago. Revenue for the period that ended in September is expected to be 4.4% higher to $4.2 billion. The full-year forecast is for $21.81 per share (+10.6%) on $17.0 billion (+6.9%). Google's earnings have beat the Street view in the past four quarters, by as much as 26 cents per share. Its long-term EPS growth forecast is 18.5%, which is higher than that of rival Yahoo! Inc. (NASDAQ: YHOO). Google has been debt free in recent quarters and short interest has been falling over the past year. Not surprisingly, the consensus recommendation is to buy GOOG, and the mean price target is $536.34. Shares are up 67.8% year to date and trading near the 52-week high of $523.25.
Other big techs reporting this week include Intel Corp. (NASDAQ: INTC), which is expected to report lower earnings, and Advanced Micro Devices Inc. (NYSE: AMD), which is expected to have swung to a loss in its third quarter.
This week's other anticipated earnings decliners include Charles Schwab Corp. (NASDAQ: SCHW), CSX Corp. (NYSE: CSX), General Electric Co. (NYSE: GE), Halliburton Co. (NYSE: HAL), Harley-Davidson Inc. (NYSE: HOG), Johnson & Johnson (NYSE: JNJ), Mattel Inc. (NASDAQ: MAT), and Safeway Inc. (NYSE: SWY).
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Reader Comments (Page 1 of 1)
10-11-2009 @ 12:07PM
Bothepro24 said...
When earnings from Bank stocks are announced, I would like to know how much was due to overdraft fees they collect. It's a joke that banks are earning money when they aren't lending any. They certainly have nothing to bundle up and sell on the market place. They show earnings because they were able to sell non performing assets to some other fool. All of this reporting has no effect on the American public. When is our government going to realize this. All of this reporting is a combined effort of the government and the financial sector to paint a picture of success, yet, We the People, continue to fall behind. All Americans need to yell at the top of their lungs, just like in the movie NETWORK, "I am mad as hell, and I am not going to take it anymore" Let me hear the voices. The rich are getting richer again, the poor are already poor, and like the halocaust, the Middle class is being slowly eradicated by a Socialist leaning, Government control freak name Barack Obama!!!!
10-11-2009 @ 12:50PM
JOE HARRISON said...
Makes sense since GS is running things. They are the largest campaign contributor for both parties every year. They own Washington. They are the frontman for the Fed banksters Rothschild, Rockefeller, Warburg, Morgan etc.
10-11-2009 @ 3:46PM
Bug said...
Of course, Rockefellers have never been at a loss for ways to cheat ya! America is in for it and our lawmakers are in on it.
10-11-2009 @ 5:34PM
Donovan said...
Well lets see. I would think the banks are, I wouldn't call it actually making money. They have the tax payers BILLIONS in TARP monies, 34 Banks alone failed to pay their TARP dividends to the Treasury Dept. Consumers have drastically cut back using charge cards, due to the excessive interest rates. Its still tough to qualify for any type of high dollar amount loan. So, I would tend to say the banks are just making interest money. On the monies they already have accumulated. Or perhaps on foreign investments. As our banks don't seem to have any interest in reinvesting in our overall economy, or the American people.
10-11-2009 @ 5:52PM
marklincoln8 said...
My piggy bank is looking more like a safer place to keep my money everyday.
10-12-2009 @ 9:20AM
almagayle50 said...
This story certainly goes hand in hand with the squeezed middle class. Every time I turn around RBC has dominoed multiple overdraft charges due to some rule in the service agreement even their own customer service rep isn't aware of. I recently a friend reimbursed me with a credit card check which I deposited at the ATM. There are no warnings on the ATM not to deposit that kind of check. No warning on the deposit envelope. They credited the check and then debited my account and returned the check even though the check was good. However, several hundred dollars out of my account without notice, bounced a check. Where is our congressional banking committee with some realistic regulations. I mean who really remembers every little bizarre rule from their service agreement.