As earnings season has officially kicked off for the fourth quarter, investors are eager to see what the financial sector earnings outlook for 2021 will mean for their beloved bank stocks.
2020 was a difficult, whiplash of a financial year, and some U.S. banks took the brunt of it more than others. While investors are preparing for the worst, there is optimism for more vaccines being distributed and a new president. Could this be the turning point banks have been looking for?
Folks, with earnings season finally here we might be looking at a rise in the financial sector after three quarters of turmoil.
First we had the COVID-19 vaccine, then we had the election and now we have earnings to look forward to.
And where do we find the most activity during this time in the stock market? That’s right, the financial sector. I’m seeing it make some moves as I write this, and there are some things we definitely need to discuss if you want to profit from the financial sector earnings outlook for 2021.
As a matter of fact — in order for you to understand the broader picture of what’s to come this week — grab a pen and some paper.
I’m about to give you numbers that are actual expectations of where investors are predicting earnings to carry the financial sector if expectations are/are not met.
The overall expectation is that the financial sector’s Q4 earnings will be down 4.8% on 2.4% lower revenue. This would follow a decline of -11.7% in the third quarter of 2020, -45% in the second quarter of 2020 and -32% in the first quarter.
So while the expectation is still negative, it’s safe to say that -4.8% looks a heck of a lot better than -45%.
However within the financial sector, banks are still faced with a tough operating environment and are expected to experience 21.4% lower earnings relative to the same period last year.
This is partly offset by earnings growth at the insurance and brokerage management facilities — you’ll see why this information is particularly crucial later on in my video.
Looking at the overall earnings picture for the S&P 500, the recovery has been better than expected following the mid-year pandemic slump. In fact, I strongly expect that the current estimates for 2021 GDP and earnings growth understate the full extent of the rebound coming our way, which is positive.
I’ll divulge more on that in the video below.
And taking an even closer look at the numbers, I noticed that big banks are coming out with notably improved profitability pictures than what we witnessed in 2020… making the financial sector earnings outlook for 2021 better than expected.
But that’s not even the best part of what’s to come as several major banks release their earnings reports this week.
If you’d like to hear more of the financial sector earnings outlook for 2021 and which financial stocks to keep on and off your radar, then check out today’s short video. I’d love to hear what you think, so be sure to leave your thoughts in the comments section below.
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