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JP Morgan And Wells Fargo To Report On Friday

With two of the biggest banks reporting their earnings this Friday, we decided to gather analysts’ expectations, estimates and contrasts with their previous earning calls.  With some analysts fearing a brewing economic downturn or even a recession (1), these two earnings calls could implicate the health of both financials and the markets as a whole.

Both JP Morgan Chase and the reinvented Wells Fargo, which recently saw its CEO Tim Sloan step down (2), will release essential numbers and details on Friday that have the potential to indicate where the two banks are headed for 2019.

JP Morgan Chase, called “the lead dog” by analyst Jim Cramer, has been trailing the financial sector of late.  The financials sector has risen 10.8% of late, where JP Morgan is up only 7.2% (3). For Cramer, a lack of a serious rally spells anxiety for the market as a whole (3).  

This follows an annual letter from JP Morgan Chase CEO Jamie Dimon, in which the CEO defended the positives of capitalism (4) in the wake of a rising socialist movement in the Democratic Party.  Dimon went on to defend stock buybacks and lambasted government over-reach as a potential way to harm (4) the nation’s economy in 2020 and 2021.

Meanwhile Wells Fargois undergoing the process of finding a new CEO (5) that will satisfy consumers and investors.  Warren Buffett, Wells Fargo’s biggest shareholder, warned against (5) a Wall Street hire as the new CEO for the bank.  

With these two narratives as the background, analysts are mixed on JP Morgan Chase and Wells Fargo’s respective futures.  As for the first quarter earnings, JP Morgan Chase’s fundamentals seem slightly above average (6). Wells Fargo, on the other hand, is trending towards a below average (6) fundamental.  

Despite these differences, sentiments towards both stocks are mixed (6).  In the case of JP Morgan Chase, analysts expect (6) the company to earn $2.37 per share, the same EPS number the company put up in the first quarter of 2018.  Conversely, Wells Fargo is expected (6) to earn $1.10 per share for the quarter, which is a boost from $0.96 in the first quarter of 2018. With the Fed becoming more dovish (6) in recent months, analysts are concerned that either bank will soar due to restrictive policy.  However, many seem more favorable of JP Morgan Chase’s outlook coming into quarter 2 than quarter 1.

How do you think the Wells Fargo and JP Morgan Chase earnings will shake out?  Do you have more confidence in one than the other? How will each impact the market as a whole?


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1 - Will the next recession by any different? Forbes, https://www.forbes.com/sites/billconerly/2019/04/05/will-the-next-recession-be-any-different/#45ec28ee6588

2 - Well Fargo CEO Tim Sloan retires. Fortune, http://fortune.com/2019/03/28/wells-fargo-ceo-tim-sloan-retires-allen-parker/

3 - Cramer: ‘We’re in trouble’ if JP Morgan’s stock doesn’t rally when it reports earnings. CNBC, https://www.cnbc.com/2019/04/04/cramer-were-in-trouble-if-jp-morgan-stock-doesnt-rally-on-earnings.html

4 - Jamie Dimon defends capitalism in annual letter: ‘Socialism inevitably produces stagnation, corruption and often worse’, CNBC https://www.cnbc.com/2019/04/04/dimon-defends-capitalism-socialism-inevitably-produces-stagnation-corruption-and-often-worse.html

5 - Warren Buffett has weighed in on what kind of CEO Wells Fargo should hire, CNN  https://www.cnn.com/2019/04/08/investing/wells-fargo-warren-buffett-ceo/index.html

6 - JPM, WFC kick earnings season on Friday, SA, https://seekingalpha.com/article/4253077-jpmorgan-wells-fargo-kick-earnings-season-friday-expect

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