Markets did not reward financials after companies reported strong quarterly results. Instead, the general market selling and continued reaction to Fed rate hikes in the U.S. pressured the group.
Bank of America (NYSE:BAC) fell by over 10% in the last month while Citigroup (NYSE:C) fell, too. JPMorgan Chase (NYSE:JPM) was not spared, either. And Morgan Stanley (NYSE:MS) tumbled in sympathy with banks.
Highlights
Bank of America earned $0.66 a share as revenue grew 4.3% Y/Y to $22.78B. It beat expectations by a wide margin. Expenses fell sharply, by 2%. By comparison, expense growth had declined in the double digits in 2015. Still, revenue grew in the single digits, compared to in 2015.
Citi earned $1.73 in EPS but revenue change was flat Y/Y to $18.39B. At this pace, the stock trades at a mere PEG of 0.6 times, a bargain for investors recognizing the profit potential as interest rate spreads widen.
JPMorgan earned $2.34/sh as net interest income grew 7% to $14.1B. The latter income growth is due to higher rates. JPM shareholders may hold the stock while getting compensated 3.09% in dividend yield.
Morgan Stanley earned $1.17 a share as revenue grew 7.3% Y/Y to $9.87B.
The strong results from these financials clearly shows patient investors will get rewarded as the selling ends and buyers rush back to the sector.
For this to happen, market volatility needs to fall and risk aversion needs to take a back seat.
