The unofficial kickoff to the 20Q3 earnings season occurred today, Oct. 13, when the S&P 500 banks industry’s Citigroup Inc (C.N), First Republic Bank (FRC.N), and JPMorgan Chase & Co (JPM.N), delivered quarterly results. Analysts had been expecting declines in both net interest income (NII) and net interest margin (NIM) for the banks industry. However, expectations were too high for the large diversified banks sub-industry constituents, as both Citigroup and JPMorgan missed analysts’ expectations for these metrics. Citigroup reported NII of $10.49 B vs. the consensus of $10.61 B and NIM of 2.03% vs. an expectation for 2.17% while JPMorgan

Net interest margin (NIM), the difference between interest charged on loans and paid on deposits, is a key profitability metric for banks which has come under pressure given a decline in global growth expectations and a low interest rate environment. An undesirable outcome related to Brexit will likely add further pressure on interest rates, impacting future profitability. HSBC Group CFO Ewen Stevenson comments, “consensus is for a further rate cut at some point in the coming months … I think, is going to impact NIM negatively over time … I would think that NIM in the U.K. continues to gradually

The battle for the cloud is under way and the two juggernauts, Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O), in the space are expected to see their cloud year-over-year (YoY) revenues grow by double digits through 2021. Microsoft reported after the close on Oct. 23. Its Azure business increased 59% from the prior year, with Intelligent Cloud business segment revenue coming in 4.1% above estimates at $10.85 billion. Speaking about the cloud’s growth, Satya Nadella, Microsoft Corporation – CEO & Director, said, “Every Fortune 500 customer today is on a cloud migration journey, and we are making it faster and

Retailing giant Amazon.com Inc (AMZN.O) is scheduled to report 19Q3 earnings after the close on Oct. 24. The company known for industry disruption is expected to increase third quarter ad-revenue 71.7% from the prior year and to far outpace the 14.2% outlook for the S&P 500 media entertainment industry group. Analysts also anticipate that Amazon will outperform the S&P 500’s interactive media & services industry (19.5%), which consists of names such as Alphabet Inc (GOOGL.O, GOOG.O), Facebook Inc (FB.O), and Twitter Inc (TWTR.N).

The unofficial kickoff to the 19Q3 earnings season initiates Oct. 15, when the S&P 500 banks industry’s Citigroup Inc (C.N), First Republic Bank (FRC.N), JPMorgan Chase & Co (JPM.N), and Wells Fargo & Co (WFC.N) deliver quarterly results. Analysts have been increasingly bearish on banks heading into 19Q3 earnings season, and currently expect the S&P 500 banks industry to see 19Q3 YoY earnings decline 1.2%, net interest income to increase 0.6%, and net interest margin to contract 9.9 bps to 2.67%.  

Earnings season for the third quarter of 2019 is around the corner. The S&P 500 is expected to see the first year-on-year (YoY) decline since 2016 and investors’ attention will soon turn to the banks industry. The group is the first to report earnings, marking the unofficial start to earnings season. Heading into the reporting period, a trend has emerged among the banks; analysts have become more bearish and have consistently made downward revisions to estimates. Exhibit 1: S&P 500 19Q3 YoY Earnings and Revenue Analysts are cutting Q3 2019 earnings estimates ahead of earnings season. YoY revenue growth expectations

A clear trend has emerged within the energy sector, consistent negative earnings and revenue forecasts for the S&P 500’s oil & gas exploration & production (E&P) sub-industry. The group continues to face a weak pricing environment and is expected to stop the exponential production growth. Exhibit 1: S&P 500 E&P YoY Growth Rates vs. Net Profit Margin Analyst estimates for E&P’s 19Q3 aggregated earnings have fallen 20.1% since July 1 and revenue expectations have come down 9.0%. As a result, the outlook for 19Q3 YoY earnings are down 15.1 percentage points (ppts) to a decline of 39.5% and revenue fell

Netflix shows that it’s not enough to beat earnings. The media giant beat 19Q2 earnings with an EPS of $0.60 vs. the $0.56 per share estimate; however, failed to deliver on a key performance indicator. Net subscriber additions for the quarter of 2,699 million missed expectations by 47.2%. As a result, Netflix shares have fallen 16%. Now that the stage has been set, investors eagerly await the fate of the remaining members of F.A.N.G., Facebook Inc (FB.O), Amazon.com Inc (AMZN.O), and Alphabet Inc (GOOGL.O, GOOG.O), which start to report this afternoon with Facebook. Exhibit 1: F.A.N.G. YoY Growth Rates Analysts

The second quarter of 2019’s earnings season kicked off with a flood of bank earnings reports. Fourteen of the 19 companies within the S&P 500’s bank industry have reported 19Q2 earnings and revenue. While the majority of companies within the industry beat top and bottom line expectations, they fell short on some industry key performance indicators (KPI’s). Exhibit 1: S&P 500 Bank Industry YoY Growth Rates The S&P 500 bank industry is expected to see 19Q2 YoY revenue increase 2.9% and earnings increase 18.4%. Of the companies that reported, 78.6% beat revenue estimates, which came in 1.7% above expectations. The

Nearly two thirds of S&P 500 companies (65%) have reported 2018 Q2 earnings and the quarter is on track to set new records. Companies are beating high earnings expectations at a record rate and earnings growth is expected to be the strongest second quarter since 2010 Q2. The quarter may also see the first trillion dollar company with Apple Inc. (AAPL.OQ) shares on the rise following their 2018 Q2 results. Exhibit 1: S&P 500 18Q2 YoY Earnings Expectation History In a typical quarter, analysts become more bearish as the earnings season approaches, making downward revisions to earnings estimates. However, the

The StarMine team has selected five U.S. companies, using the Eikon Screener, that we expect to miss earnings estimates, based on SmartEstimate® and Predicted Surprise data. SmartEstimates® aim to provide earnings forecasts that are more accurate than I/B/E/S Consensus Estimates, by putting more weight on the recent forecasts of top-rated analysts. When SmartEstimates® diverge significantly from Consensus, you can anticipate the occurrence of earnings surprises with an accuracy rate of 70%. Revenue SmartEstimates® are even more predictive of surprises, with a historical accuracy rate of 78%. North American 17Q1 Negative Surprise PredictionsSources: Eikon, StarMine On average (since 1994), 64% of S&P 500

The unofficial kickoff to the Q1 2017 earnings season is set for Apr. 13, 2017, when several of the Financials sector’s banks are expected to report results for the quarter. Heading into the quarter, year over year (Y/Y) growth is expected to be strong for both earnings and revenue. As a result, the S&P 500 will likely post the highest growth in over 5 years.   Exhibit 1. S&P 500 Banks Industry 17Q1 Key Performance Indicators Sources: I/B/E/S data, Eikon Banks in Focus With the S&P 500 Banks Industry Index (.52P40101010) down 1.69% YTD, as of the Apr. 12 close, focus