Earnings playbook: Your guide to trading this week's biggest reports, including Goldman Sachs
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It’s a holiday shortened week, but there are still some major earnings reports on deck for investors to pore through. Goldman Sachs and Morgan Stanley are the two major names that are scheduled to report. Their results come after mixed numbers last week from banking rivals JPMorgan Chase , Wells Fargo , Bank of America and Citigroup . Wall Street will also get a look this week at the health of the regional banks, when Cleveland-based KeyCorp and PNC Financial in Pittsburgh release their fourth quarter numbers. Data compiled by The Earnings Scout shows the early reporters have had no trouble beating earnings expectations so far. Of the S & P 500 that have posted results, 97% have topped analysts’ bottom-line estimates. However, only 55% have beaten top-line, revenue forecasts. Take a look at CNBC Pro’s breakdown of what’s expected from some of this week’s key reports. Tuesday Goldman Sachs is set to report earnings before the bell, followed by a conference call at 9:30 a.m. ET. Last quarter: GS reported earnings that beat analyst expectations thanks to strong revenue from bond trading . This quarter: Analysts expect Goldman’s earnings and revenue rose slightly from the year-earlier period, according to LSEG. What CNBC banking reporter Hugh Son is watching: “Goldman Sachs is likely to post writedowns on commercial real estate and equity stakes, as well as severance charges tied to layoffs. But what matters is guidance on the advisory pipeline: how much pent up demand for M & A deals do they expect this year?” What history shows: Goldman exceeds earnings expectations 85% of the time, data from Bespoke Investment Group shows. However, the stock has fallen on three of the last four earnings days, including a 6.4% drop after the bank posted its fourth quarter 2022 results. Morgan Stanley is also set to report earnings in the premarket. Management is slated to hold a call at 8:30 a.m. ET. Last quarter: MS shares were under pressure because of disappointing wealth management revenue . This quarter: Analysts polled by LSEG estimate the bank’s profit fell nearly 20% year over year. What CNBC banking reporter Hugh Son is watching: Morgan Stanley is seeing off its lauded CEO James Gorman, and I expect to hear from successor Ted Pick about his vision for the company and guidance for 2024 and beyond. What history shows: Morgan Stanley beats earnings estimates 77% of the time, according to Bespoke. The stock averages almost 1% gain on all earnings days, and it’s risen on three of the last four days that earnings have come out. PNC Financial is set to report earnings before the bell. Corporate leadership is scheduled to hold a conference call at 11 a.m. ET. Last quarter: PNC earnings beat analyst expectations, but revenue came up short. This quarter: PNC’s earnings are expected to have fallen by more than 15%, per LSEG. What CNBC is watching: PNC is coming into its fourth quarter report from a position of relative strength. The stock lost just 1% in 2023, while the SPDR S & P Regional Banking ETF (KRE) was down 10.7%. JPMorgan has an overweight rating on the bank heading into the report, citing “1) track record of good de novo growth in higher multiple fee-generating businesses, such as treasury management; 2) robust technology infrastructure and history of good tech-led product development.” What history shows: Bespoke data shows PNC tops earnings expectations 75% of the time. Shares fell more than 2% on Oct. 13 after the bank posted third quarter results. Thursday KeyCorp is set to report earnings before the opening bell, with management scheduled to hold a conference call at 9 a.m. ET. Last quarter: KEY reported earnings and revenue that inched above expectations, but the stock lost more than 1%. This quarter: KeyCorp is expected to report sharp year-over-year declines in earnings and revenue, LSEG data show. What CNBC is watching: KeyCorp is coming off a tough year, after losing more than 17% in 2023 following a crisis that engulfed the entire regional banking sector. Can KeyCorp show signs of a turnaround? Jefferies thinks so, with the firm upgrading the bank to buy from hold earlier this month. “KEY has the most benefits to its forward NII performance from the maturities of low-yielding UST securities and low rate receive-fixed swaps. This hurt 2022-2023 results, but the burden maxed-out in 3Q23 and will improve from here,” Jefferies said. What history shows: KeyCorp shares have fallen on four of the last five earnings days, Bespoke data shows. Friday Schlumberger is set to report earnings premarket. A conference call is slated for 9:30 a.m. ET. Last quarter: SLB posted lackluster results relative to Street expectations, sending shares down nearly 3%. This quarter: Analysts are optimistic about Schulmberger’s financials, with LSEG data showing estimates of double-digit, year-over-year increases in earnings and revenue. What CNBC is watching: Schlumberger fell more than 2% in 2023, and its struggles have continued in early 2024, with shares down 4%. However, Wells Fargo analyst Roger Read expects the oilfield services provider to recover as the year progresses. “Steady increases in the International rig count during 2023 position SLB for a stronger start to 2024. Higher offshore rig rates do not directly benefit SLB, but higher rates do incentivize producers to utilize time saving service offerings to reduce non-productive time (NPT). We see this setup as generating favorable tailwinds for SLB in 2024,” the analyst wrote last month. What history shows: Schlumberger beats earnings expectations 70% of the time, according to Bespoke. However, shares have fallen on four straight earnings days.
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