Early Q2 Results Reveal A Highly Robust Earnings Landscape

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The big banks have kicked off the Q2 earnings season with remarkable momentum. Both earnings and revenue growth rates—along with the percentage of companies beating expectations—are tracking significantly higher than in recent quarters. While we are still in the opening stages of the Q2 reporting cycle, these early results strongly reinforce the robust corporate earnings trend we've been seeing.
For the 34 S&P 500 companies that have reported Q2 results already, total earnings are up +55.3% from the same period last year on +18.8% higher revenues, with 91.2% beating EPS estimates and 82.4% beating revenue estimates.
The Q2 earnings and revenue growth rates have been boosted by Micron's (MU - Free Report) very strong quarterly results, but the earnings and revenue growth rates would still compare favorably with other recent periods when we exclude Micron from these results. Excluding Micron, Q2 earnings for the remaining 33 index members that have reported Q2 results would be up +21.5% (vs. +55.3% otherwise) on +12.5% higher revenues (vs. +18.8% otherwise).
For the Finance sector, we now have Q2 results from 36.6% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are up +30.2% from the same period last year on +20.4% higher revenues, with all the companies beating EPS estimates and 90.9% beating revenue estimates. This is a notably better performance from these Finance companies relative to what we have seen from the group in other recent periods.

Banks Kick off the Q2 Earnings Season in Style

The big banks and brokers kicked off the Q2 reporting cycle in style, comfortably beating consensus EPS and revenue estimates and providing reassuring reads on underlying trends in their businesses. JPMorgan's (JPM - Free Report) Q2 earnings increased +21.7% from the same period last year on +27.7% higher revenues, while those for Bank of America (BAC - Free Report), Citigroup (C - Free Report), and Wells Fargo (WFC - Free Report) increased +27.5%, +45.1%, and +18.4%, respectively.

Bank stocks in general and these four stocks in particular have enjoyed a decent but otherwise unspectacular run this year, as some of the earlier geopolitical risk factors have eased lately. Banks are cyclical businesses, so any real or perceived reduction in economic risk is positive for their outlook.

The chart below shows the year-to-date performance of JPMorgan, Bank of America, Citigroup, and Wells Fargo shares relative to the S&P 500 index and the Zacks Finance sector.