Earnings season is upon us my friends; and the stage is set for a very interesting one. Most are expecting earnings declines thanks to poor economic conditions around the world, a strong United States dollar and low oil prices. Unfortunately, I have to agree with these expectations. Nonetheless, as with any earnings season, there are going to be several reports that surprise investors and analysts with higher than expected earnings. Well, JPMorgan is set to release their earnings report for the quarter tomorrow before the bell. While analysts aren't expecting to see much growth, this is one of the companies that has the ability to produce a surprise. Today, we'll take a look at JPMorgan's earnings history, what analysts are expecting to see this quarter, what I'm expecting to see this quarter, and how binary options traders can profit from the trend.
JPMorgan's Earnings History
As an investor myself, I've learned that history often repeats itself in the stock market. As a matter of fact, that idea is one of the fundamental building blocks of technical analysis. With that said, when trying to determine whether or not a company is going to produce an earnings surprise, the first thing I look at is history; and JPMorgan has a bit of a checkered past in that respect. As a matter of fact, over the past 7 quarters, the company has either beat or missed Wall Street expectations. Beating expectations three times and missing expectations four times. With that said, this statistic still leaves a bit of uncertainty.
What Analysts Are Expecting This Quarter
Since JPMorgan's earnings history is on both sides, it's more important in this case to look at what analysts are expecting and try to figure out whether or not those expectations are realistic. According to NASDAQ, analysts are expectations with regard to earnings for the quarter average out at $1.45 per share. However, popular analysts like Whisper Number and Estimize are expecting to see earnings a bit higher; they expect to see earnings of $1.58 and $1.47 respectively. What is important to realize here is that if analysts are correct, JPMorgan growth over the quarter will only be about 1%. Now the question is whether or not that's realistic.
What I Expect To See
In my opinion, the analysts at NASDAQ hit the nail on the head with this one. The reality is that JPM's core business is in lending and investing. On the lending side of the fence, growth isn't expected to be great. Currently low interest rates hinder profits. Also, with economic fears around the world, I'm expecting the investing division to admit struggles throughout the quarter. Between the two, I do see potential for slight quarter over quarter growth, but I'm not expecting to the growth to be exponential. With that said, I wouldn't expect to see any major positive surprises tomorrow morning.
How To Earn From The Trends
JPMorgan stock is one of those stocks that tends to have an adverse reaction after earnings. For example, last quarter, the stock smashed Wall Street earnings expectations. Nonetheless, we saw a loss of 0.6% on the stock over the following 10 days. With that said, you'll want to watch the chart closely when trading this one tomorrow. If earnings come out ahead, it wouldn't be surprising to see declines; however, things can really go either way. So, wait for the earnings report to be released and watch the candlestick chart for a period of 5 minutes. After this time, a trend should make itself apparent. From there, purchase calls if the trend is up and puts if the trend is down.
What Do You Think?
Do you think JPMorgan will beat earnings expectations? Why or why not? Let us know in the comments below!