
Earnings season is underway and investors are once again looking forward to dissecting quarterly performance results in hopes of uncovering signs of growth amid an otherwise gloomy scene on Wall Street.
Alcoa (AA) unofficially kicked off earnings season this Monday after the closing bell. Not surprisingly, weakness in the metals and mining market dragged on earnings growth; Alcoa’s quarterly results topped analysts’ estimates but revenue figures fell short of expectations, ultimately leading to a sour reaction in the market following the release.
Looking ahead, the consensus surrounding this earnings season is overwhelmingly pessimistic. In fact, according to FactSet, estimated earnings growth for the S&P 500 as a whole is expected to come in negative at 5.3% for Q4 of 2015. Consider the chart below which compares the performance of the market (left axis) to the forward looking 12-month EPS (right axis):

The biggest takeaway here is that price appreciation for the S&P 500 has stalled in light of deteriorating earnings growth expectations. If the index does report a decline in earnings this season, it will mark the first time the S&P 500 has posted three consecutive quarters of year-over-year declines in earnings since Q1 – Q3 of 2009.
Key themes to consider this earnings season:
- Will the strong U.S. dollar still be cited as a major headwind?
- What is the longer-term impact of lower oil prices on sectors outside of energy?
- How much of a threat is continued weakness in China across various sectors?
- Will higher wages at home negatively impact already muted earnings growth?
ETFs to Play Financials Sector Earnings
Below, we look at some of the big banks and other notable financials names reporting quarterly results this week on Wall Street. In addition, here is a list of all companies reporting earnings this week.
Note that the ticker of each stock is linked to results from ETFdb’s proprietary (and free!) ETF Stock Exposure Tool. How does it work and what does it do? Just search for any ticker and you’ll see which ETFs hold that stock (if any) and how much of their portfolio is allocated to it.
- JPMorgan Chase (JPM) is expected to report EPS of $1.29 on Thursday before the bell.
- Bank of Ozarks (OZRK) is expected to report EPS of 56 cents on Thursday after the bell.
- BlackRock (BLK) is expected to report EPS of $4.83 on Friday before the bell.
- Citigroup (C) is expected to report EPS of $1.07 on Friday before the bell.
- PNC Financial Services (PNC) is expected to report EPS of $1.80 on Friday before the bell.
- Regions Financials (RF) is expected to report EPS of 19 cents on Friday before the bell.
- U.S. Bancorp (USB) is expected to report EPS of 79 cents on Friday before the bell.
- Wells Fargo & Company (WFC) is expected to report EPS of $1.02 on Friday before the bell.
A “Wide Net” Strategy for Earnings Season
For those who wish to play financials earnings “as a whole,” there are a number of all-encompassing ETFs that are appropriate for such an approach. For starters, be sure to consider all of the broad-based financials sector ETFs available.
Separately, more nimble investors and active traders may wish to consider the ETF Trading Cheat Sheet as it includes (more granular) leveraged and inverse options for those who wish to make amplified and bearish bets, respectively.
The Bottom Line
Earnings season is a volatile time, especially so in the context of the current market environment. If you’re going to navigate the market during these choppy times, be sure to utilize limit and stop-loss orders as they are absolutely vital when it comes to protecting your capital and locking in gains.
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