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The Week Ahead: Banks Dominate Earnings Releases

Citigroup, Wells Fargo, and JPMorgan Chase are among the big banks set to report.

Earnings season heats up with several major banks releasing this week.

Citigroup C recently announced an investment of 2,500 software developers for trading and investment banking as the industry moves more digital. Our analysts say the firm's global emphasis has allowed it to capitalize on revenue streams in emerging markets such as Latin America and Asia to offset volatile U.S. markets.

Attention will be focused on newly appointed CEO Charles Scharf during his first earnings report at Wells Fargo WFC. The company barely missed earnings last quarter as it continued to hash out its restructuring plan.

JPMorgan Chase JPM has beat earnings estimates the past three quarters and is hoping to do it again Tuesday. The wide-moat firm is focused on growth throughout its business lines and is predicted to open 400 new branches by the end of 2022. We maintain our fair value estimate of $114.

Goldman Sachs GS releases earnings on Wednesday. Aiming to increase investor transparency, Goldman recently renamed its four primary business units as global markets, investment banking, asset management, and consumer and wealth management. The firm is also hosting its first investor day at the end of the month to explain updated targets, profitability measures, and the shift of its $5 billion revenue goal away from 2020.

Like its competitors, Bank of America BAC is hoping to diversify its revenue stream amid market volatility and uncertain economic conditions. It is expanding its retail business with new ATMs and branches and a focus on technological advancement such as Zelle and Erica. The wide-moat firm reports Wednesday.

Charles Schwab SCHW reports Thursday in its first earnings report since announcing its acquisition of TD Ameritrade AMTD. The merger agreement was completed late last year, and the acquisition should be completed in the second half of 2020. Our analysts predict Schwab's brand and diversification will help it continue to be a leader in passive management.

Morgan Stanley MS also reports Thursday. The firm announced the termination of 1,500 jobs last month owing to economic uncertainty. The firm has been conscious of risk by focusing more on wealth management as opposed to trading.

Top air carrier Delta DAL will also be reporting earnings Thursday and is hoping to beat earnings estimates for the third consecutive quarter. At the recent Consumer Electronic Show, Delta announced several technological initiatives, including free Wi-Fi on all flights and a collaboration with IBM's Q Network to build computer applications that will improve consumers' integrated experiences. Delta was the first air carrier to have a booth at CES.

In other economic news, the presidents of the Boston, Atlanta, Philadelphia, Kansas City, New York, and Dallas federal reserves will be speaking this week. Consumer Price Index data will be released on Tuesday, and retail sales on Thursday.

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