Companies are beginning to report third quarter earnings after a summer impacted by economic uncertainty in Asia. Major banks including Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) will post earnings this week as well as notable companies such as General Electric Company (NYSE:GE) and Netflix, Inc. (NASDAQ:NFLX). Here is what to watch for before earnings are released:
Bank of America
Bank of America (NYSE:BAC) will release third quarter earnings on Wednesday, October 14, before market open. Analysts expect the company to post earnings per share of $0.33 on quarterly revenue of $20.8 billion. This marks a potential year-over-year EPS increase from ($0.01) though a year-over-year decrease in revenue from $21.4 billion.
BAC fell nearly 10% in the third quarter. The company is working to return to levels of assets and revenue achieved before the 2008 financial crisis. Last quarter, the company’s legal costs dropped as it settled a large bulk of claims. The significant decrease of legal claim backlog will boost earnings this quarter. Now, investors are looking forward to Bank of America changing its tactics and rhetoric from the defending legal claims to focusing on growth and revenue.
Thirteen of the 16 analysts polled by TipRanks in the last three months are bullish on Bank of America while one analyst is bearish and two stay on the sidelines. The average price target is $19.14, marking a nearly 23% upside from current levels.
Major bank JPMorgan Chase & Co. (NYSE:JPM) will release third quarter earnings on Tuesday, October 13, after market close. Analysts estimate earnings per share of $1.38 and quarterly revenue of $24 billion, marking an EPS increase from the $1.36 posted in the same quarter of last year, but a decrease in revenue year-over-year compared to $24.4 billion.
The company will be the first major U.S. bank to post earnings this quarter and analysts will be looking for changes in FICC (fixed income, currencies, and commodities) revenue. Due to steady foreign exchange rates and low commodity prices, analysts expect a 17% decrease in this figure. The financial sector has underperformed this quarter, growing only 8.4% compared to expectations of 14.8%.
According to the nine analysts polled by TipRanks in the last three months, eight analysts are bullish on JP Morgan while one is staying on the sidelines. The average 12-month price target for the stock is $74, marking a nearly 20% potential upside from current levels.
General Electric Company (NYSE:GE) will post third quarter earnings on Friday, October 16, before market open. Analysts estimate that the company will post $0.26 earnings per share on $28.98 billion in revenue. In the same quarter of last year, the company posted EPS of $0.38 on $36.2 billion in revenue.
Investors should look for notes on the company’s progress in its effort to shrink its financial segment. In April, GE announced its intentions to sell most of its capital assets and return to its industrial roots. The company is now facing pressure to execute change as Trian, a hedge fund operated by activist investor Nelson Peltz, recently purchased a $2.5 billion stake in GE. Peltz is committed to helping GE transform back into an industrials-focused company.
According to the four analysts polled by TipRanks in the last three months, three are bullish on GE while one is staying on the sidelines. The average 12-month price target between these four analysts is $30.25, marking a nearly 8% potential upside from current levels.
Online streaming company Netflix, Inc. (NASDAQ:NFLX) is scheduled to post third quarter earnings on Wednesday, October 14, after market close. Analysts estimate the company will post earnings per share of $0.08 on $1.75 billion in revenue; $1.07 billion of which is expected to come from the U.S. This revenue figure would mark a 24% year-over-year increase.
Investors are keeping an eye on the competition as Hulu and Amazon begin to increase efforts to create original content. Netflix spends a significant amount on creating original content such as Orange Is the New Black, House of Cards, and most recently, Narcos. Although the website continues to increase its collection of impressive shows, analysts are worried that a recent price hike will take a toll of subscriber levels. Last month, the company announced a $1 increase to its monthly plan for new users, though it promised current users that the hike would only be implemented in two years.
According to the 28 analysts polled by TipRanks in the last three months, 19 are bullish on the stock; two are bearish, and seven remain on the sidelines. The average 12-month price target between these 28 analysts is $121.63, marking a 7% potential upside from current levels.