Big Banks Set to Kick Off Earnings Season—How Do They Stack Up to One Another?

Based on assets, the four largest banks in the United States are JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and Citigroup (NYSE:C). All four of these banks will report second quarter earnings results within a few days of one another. JPMorgan, Wells Fargo, and Citi will all report before the opening bell on July 14. Bank of America will report before the open two days later.

You could lump these four stocks together with a few other companies and you would have the definition of “too big to fail”.  Too big to fail is a phrase that came about after the financial crisis in 2007-2009. It was used to describe financial institutions that were so big that the overall economy could come under pressure if one of them failed.

Since that time the Treasury and the Federal Reserve have a system of tests that they call a "stress test" to measure different aspects of the bank to make sure we don't go through another financial crisis. Because of the nature of the test and the industry that was at the center of the financial crisis, the companies in this group are all financial firms.

The group is susceptible to moving with the overall economy. If the economy is growing banks tend to do well and they don't do well when the economy is contracting. With the economy struggling right now due to the global health crisis, banks are struggling too.

Looking at the Tickeron scorecard for each of the four stocks, there is only one that is rated as a “buy” while one is rated as a “sell” and two are rated as “strong sells”. Citigroup is the lone buy in the group.

JPMorgan and Wells Fargo are the two that get the strong sell ratings, and Bank of America is rated as a sell.

Digging into the reasoning behind the ratings, the group as a whole doesn’t do real well on the fundamental side of the equation. All four stock rank poorly in the SMR rating category. In fact, all four are in the bottom 10 percentile. Citi ranks highly in its Outlook Rating and in the Valuation Rating, but it also ranks poorly in four categories.

Bank of America scores well in the Outlook Rating and it ranks poorly in two other categories. Wells Fargo ranks poorly in four categories but gets a good Valuation Rating. JPMorgan gets neutral ratings in four categories and poor ratings in two categories.

Turning our attention to the technical analysis, three of the four have received bullish signals from the AROON Indicator in the last two weeks. Unfortunately, those are the only positive indicators in the whole bunch.

All four show stochastic indicators in oversold territory with Citigroup only being oversold for four days. Bank of America has been in oversold territory for nine days. Both JPMorgan and Wells Fargo have been in oversold territory for 14 days.

Looking at the analysts EPS estimates for the quarter, expectations are pretty low. I looked at the current EPS estimate, where the estimate was 90 days ago (when the pandemic was just starting to take a toll in the U.S.), and what each companies’ EPS was for the same quarter last year. The results were pretty abysmal.

Bank of America has the smallest adjustments of the bunch. The EPS estimate has been lowered by 43.4% over the last three months and the estimate is 59.46% below last year’s EPS figure. JPMorgan shows slightly worse adjustments with the estimate being lowered by 44.55% and 60.28% below last year.

Citigroup’s estimate has been lowered by 68.71% and it’s 76.41% below 2019. Wells Fargo has struggled for several years now compared to its rivals and it is expected to struggle more than the others this quarter. The EPS estimate has dropped 91.89% and it’s 95.38% below the second quarter of 2019.

Banks have lagged the overall market over the past year and based on the earnings forecast, it doesn’t look like it will get any better after the earnings announcements. Citigroup might be worth a short-term trade based on Tickeron’s scorecard, but the other three have little appeal for investors at this point in time.

We could see small jumps if the banks beat estimates, but the long-term trend for earnings and revenue will need to improve dramatically to appeal in investors again.

Contributor

Harry Richardson|Expert

Harry Richardson — Algorithmic Trader & Strategy Developer Harry is an algorithmic trader specializing in impulse and breakout trading strategies across cryptocurrency and equity markets. With more than 10 years of experience in developing automated trading systems, he focuses on building structured algorithms designed to capture momentum while maintaining strict risk control. His approach combines quantitative analysis, real-market execution, and continuous performance monitoring. Vitalii prioritizes risk management, drawdown control, and strategy stability over short-term optimization, ensuring algorithms are adaptable to changing market conditions. He has developed and tested hundreds of automated strategies, working extensively with live trading environments, forward testing, and portfolio-level algorithm management. His work centers on transforming trading ideas into fully operational, scalable automated systems.

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