Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America

Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Goldman Sachs, Morgan
                         Stanley and Bank of America

PR Newswire

CHICAGO, Jan. 21, 2013

CHICAGO, Jan. 21, 2013 /PRNewswire/ --"Zacks Director of Research, Sheraz
Mian, says low expectations for this earnings season were set by the very weak
third quarter reporting."

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Q4 Earnings Largely Uneventful Thus Far



The fourth quarter earnings season hasn't been that eventful thus far even
though we have results from 67 S&P 500 companies already (as of Friday,
January 18th). The reason is that expectations for this earnings season were
set by the very weak third quarter reporting season. Given those low
expectations, the actual performance is a tad bit better relative the third
quarter, though it remains sub-par relative to the last 6 to 8 quarters.

Total earnings for the 67 S&P 500 companies that have already reported results
are up +15.6% from the same period last year, with 59.7% of the companies
beating expectations with a median surprise of +2.3%. Revenues are up +5.8%,
with 40.3% of the companies beating top-line expectations and a median revenue
surprise of +1%. All of that growth is coming from the Finance sector, with
strong earnings growth at JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman
Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) more than offsetting the weakness
from Bank of America (NYSE:BAC). Excluding Finance, total S&P 500 earnings are
essentially flat (up only +0.1%).

Combining the reports that have come out with the bulk of the reports still to
come, the composite fourth quarter earnings growth rate is up +1.5%. The
actual dollar amount of fourth quarter earnings is the lowest quarterly total
in 2012. But the expectation is for earnings growth to resume from the second
quarter of 2013 and increase materially in the back half of the year.

I have been skeptical of those growth expectations for awhile now, but that's
exactly what the market is pricing at present. We have started expectations
for 2013 come down a bit, but there is likely much more room to go.

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