Q4 Earnings Season Kicks Off: Which Bank to Bet on Ahead of Tomorrow's Results?

Earnings season is set to kick off with results from some of America's biggest banks, including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) - due tomorrow before the market opens.

To better evaluate how these companies look going into the reports, we will take a look at their strengths and weaknesses using our new flagship tool: ProTips :

JP Morgan (JPM)/h2

The results are expected on Friday and the analyst consensus forecasts EPS of $3.61, down from $4.33 in the previous quarter, but slightly up on the same quarter a year earlier.

Source: InvestingPro

Revenues are expected to reach $39.72 billion, slightly less than in the previous quarter, but 15% more than the previous year.

InvestingPro data shows that JPM's results have exceeded expectations in terms of EPS and revenues by a wide margin for the last 5 consecutive quarters.

What does ProTips tell us about JP Morgan's strengths and weaknesses?/h2

As you can see from the image below, all the ProTips for JP Morgan are quite positive.

Source: InvestingPro

ProTips tell us that the company boasts high earnings quality, with free cash flow exceeding net income.

The detailed FCF/Net Income metric page for JP Morgan shares reveals this:

Source: InvestingPro

Another strong point highlighted by ProTips is the fact that its earnings growth has accelerated.

ProTips reveal that JPM's 12-month revenue growth was 18.1%, among other key details.

Source: InvestingPro

Bank of America (BAC)/h2

Bank of America's next quarterly results should see EPS fall to $0.65 according to analysts, compared with $0.90 in the previous quarter, and $0.85 last year.

Source: InvestingPro

Revenues are also expected to decline, to a consensus of $23.81 billion, versus $25.167 billion in the previous quarter, and $24.532 billion a year earlier.

What does ProTips tell us about Bank of America's strengths and weaknesses?/h2

Bank of America's profile, based on the ProTips, is a mixed bag:

Source: InvestingPro

On the positive side, the bank's revenue growth has accelerated by 5.7% over the past 12 months.

The company's total debt has risen for several years in a row, jumping by 20.5% in the last quarter.

Citigroup (C) /h2

Analysts are forecasting a sharp drop in earnings, with EPS anticipated at $0.77 versus $1.52 in the previous quarter and $1.16 a year earlier.

Source: InvestingPro

Revenues are also expected to fall, to $18.771 billion from $20.139 billion in the previous quarter, but up slightly from $18 billion in the same quarter last year.

What does ProTips tell us about Citigroup's strengths and weaknesses?/h2

According to InvestingPro's ProTips, Citigroup's share profile is fairly negative, with few bullish ProTips.

Source: InvestingPro

In addition to a share price that has risen strongly over the past 3 months, positive ProTips tells us that revenue growth has accelerated, albeit at a fairly low rate of 2.3% over the past 12 months:

Source: InvestingPro

On the negative side, the ProTips note in particular that the company has a valuation that implies a poor cash flow yield, more precisely -61.8% over the last 12 months according to the Tip's details.

Fair value, analyst forecasts, and financial health/h2

It will also be useful to look at the conclusions of valuation models, analyst forecasts, and the financial health of JPM, BAC, and C.

We have grouped the 3 stocks into an InvestingPro Watchlist, configured to display the details we need:

Source: InvestingPro

Bank of America shows the best potential, being considered undervalued by 23.6%.

JP Morgan has the best potential according to analysts, who forecast that the stock will grow by 11.1% over a 12-month horizon.

Finally, JP Morgan also has the best financial health score, rated "very good".

Conclusion/h2

JP Morgan seems to be the strongest stock among the 3 banks reviewed in this article.

One downside, however, is that the stock is currently considered to be correctly valued by InvestingPro.

It will therefore be interesting to monitor the Fair Value update once tomorrow's results have been taken into account before deciding to invest.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. As a reminder, any type of asset is evaluated from multiple perspectives and is highly risky, and therefore, any investment decision and the associated risk remains with the investor.