Earnings playbook: Big banks and an airline kick off the reporting season

Published Sun, Apr 10 20229:44 AM EDTUpdated Sun, Apr 10 202212:57 PM EDT

Next week will be a shortened one on Wall Street due to the Good Friday holiday, but the corporate earnings season will get going with some of the biggest U.S. banks slated to report. Among the companies scheduled to post their first-quarter results are JPMorgan Chase, Goldman Sachs and Wells Fargo. Delta Air Lines will also give its latest quarterly update. Take a look at CNBC's breakdown of what's expected from each report. Wednesday JPMorgan Chase is set to report quarterly figures before the bell and will host an investor call at 8:30 a.m. ET. Last quarter: JPM warned it expected higher expenses would hinder companywide returns going forward . This quarter: Analysts polled by Refinitiv expect first-quarter earnings per share to come down by about 40% on a year-over-year basis. What CNBC banking reporter Hugh Son is watching: "JPMorgan Chase is first out the gate, and investors will have more questions than usual for the biggest U.S. bank by assets. Wall Street is the big X-factor this quarter, and nobody knows whether Ukraine-related market turmoil was a good or bad thing for trading desks. While investment banking fees from activities like IPOs should be lower this quarter, rising interest rates may help boost interest income." What history shows: Data compiled by Bespoke Investment Group shows that JPMorgan earnings have beaten analyst expectations 83% of the time over the past 20 years. Delta Air Lines is slated to report quarterly results before the bell, and it's scheduled to host an investor call at 10 a.m. ET. Last quarter: DAL maintained its full-year earnings forecast despite the Covid-19 omicron variant dampening the outlook for global travel demand . This quarter: Analysts expect the airline to report a quarterly loss, but they also see revenue more than doubling from the year-earlier period, according to Refinitiv. What CNBC airlines reporter Leslie Josephs is watching: "Delta is the first U.S. airline to report earnings, and investors are eager to hear how much it can raise ticket prices to cover a surge in fuel costs this year. On one hand, travel demand — especially for trips in the U.S. — has surged as Covid cases dropped. However, it will be more expensive for airlines to fly those planes. That means they will have to balance covering their costs without turning customers off with prices that are too high at a time when inflation is already strong. The carrier's executives will also likely detail its staffing levels as the peak summer travel season approaches." What history shows: Delta averages a 1.54% daily gain on days it reports earnings, according to Bespoke. Bed Bath & Beyond is set to report earnings before the bell, followed by an investor call at 8:15 a.m. ET. Last quarter: BBBY posted disappointing quarterly figures , as supply chain issues hammered away at the company . Still, the stock rallied more than 8% that day. This quarter: Wall Street analysts expect to see a 20% year-over-year revenue decline for the quarter, according to Refinitiv. What CNBC retail reporter Melissa Repko is watching: "Investors want to see proof that Bed Bath & Beyond's turnaround efforts are working and its supply chain problems are dissipating. Sales at the home goods retailer have disappointed, even as the company has launched new brands, shuttered underperforming stores and spun off some of its other businesses — including Christmas Tree Shops and Cost Plus World Market. Investors may also ask about the company's recent resolution with activist investor and GameStop chairman Ryan Cohen, which is prompting a strategic review of its BuyBuy Baby business." What history shows: Bed Bath & Beyond shares typically struggle on earnings day, averaging a loss of 1.21%, according to Bespoke. Thursday Wells Fargo is set to post first-quarter results Thursday before the bell and will host an investor call 10 a.m. ET. Last quarter: WFC reported an earnings jump , as revenue beat analyst expectations. This quarter: Wells Fargo earnings per share are expected to decline by more than 20% on a year-over-year basis, according to Refinitiv. What CNBC banking reporter Hugh Son is watching: "Wells Fargo came into the year as many analysts' top stock pick for one simple reason: Of big banks, it's considered a big beneficiary of rising interest rates. Analysts will want to see just how much the rise in rates this year has flowed to the bottom line, and what management thinks about the expected hikes later this year.". What history shows: Wells Fargo shares have historically stayed relatively muted on earnings report days, averaging a gain of just 0.12%, according to Bespoke. However, the stock has posted daily moves of more than 3% in two of the last three earnings days. Goldman Sachs is set to report before the bell, with an investor call scheduled for 9:30 a.m. ET. Last quarter: GS shares slid 7% as surging expenses and an equities trading revenue slowdown led to weaker-than-expected earnings . This quarter: Analysts expect earnings to fall by more than 50% on a year-over-year basis, along with a 31% revenue slowdown, according to Refinitiv. What CNBC banking reporter Hugh Son is watching: "Goldman Sachs is the big American bank most exposed to trading and investment banking, so it's understandable that shares are off about 16% this year. The quarter could be a test for how much more durable and annuity-like the bank's revenue is amid CEO David Solomon's push to diversify earnings. Investors will want to see how resilient trading was this quarter and understand whether a drop in IPO listings and slowdown in deals is transitory." What history shows: Despite the fourth quarter 2021 report sparking a sharp downside move, Goldman Sachs shares average a one-day decline of just 0.06%, according to Bespoke. The company has also beaten earnings expectations 86% of the time, the data shows. Citigroup is set to report earnings before the bell and will host an investor call at 11 a.m. ET Last quarter: C reported a quarterly profit decline of 26% , citing an increase in expenses. This quarter: Analysts are forecasting another sharp drop in earnings, according Refinitiv. What CNBC banking reporter Hugh Son is watching: "Citigroup is reporting results for the first time since CEO Jane Fraser's recent investor day, and results aren't likely to be great. The bank was already facing headwinds tied to loan loss reserves accounting; it's also the big U.S. bank most exposed to Russia and efforts to sell a local bank subsidiary there are complicated by the war in Ukraine." What history shows: Citigroup has beaten earnings estimates 76% of the time, but the stock averages a decline of 0.48% on earnings day, Bespoke data shows. Morgan Stanley is slated to report earnings before the bell, followed by an investor call at 8:30 a.m. ET Last quarter: MS reported better-than-expected quarterly earnings , sending the stock up 1.8% on the day. This quarter: Morgan Stanley is expected to report an earnings-per-share decline of nearly 20% on a year-over-year basis, according to Refinitiv. What CNBC banking reporter Hugh Son is watching: Analysts have sharply lowered EPS estimates for Morgan Stanley as a source of strength last year – strong markets for IPOs and acquisitions – seized up in the first quarter, thanks to the stock market retrenchment and Ukraine war. It's possible their reaction has been overly pessimistic, however, as Morgan Stanley's share of revenue from more durable sources including wealth management has grown in recent years. What history shows: Morgan Stanley typically performs well on days it reports earnings, averaging a gain of 0.94%, according to Bespoke. The company has also beaten earnings estimates 80% of the time.

Traders on the floor of the NYSE, March 1, 2022.

Source: NYSE

Next week will be a shortened one on Wall Street due to the Good Friday holiday, but the corporate earnings season will get going with some of the biggest U.S. banks slated to report.

Among the companies scheduled to post their first-quarter results are JPMorgan Chase, Goldman Sachs and Wells Fargo. Delta Air Lines will also give its latest quarterly update.

Take a look at CNBC's breakdown of what's expected from each report.