Large bank revenues have fallen and the results were positive enough to stifle concern over their valuations, CNBC’s Jim Cramer said Thursday.
Shares of large financial institutions such as JPMorgan Chase and Wells Fargo have risen since last summer, far outstripping the market.
Cramer, himself a student at Goldman Sachs investment store, said his quarterly numbers should be strong enough to support his current valuations.
“We have something less to worry about now that the profit season has begun to roll. Banks are doing very well, even if their actions don’t necessarily reflect that fact,” the Mad Money host said “.
JP Morgan, Goldman and Wells Fargo posted results Wednesday, followed the next day by Citigroup and Bank of America. Although each company has shown higher and lower rates in the first quarter of this year, its stock market operations diverged as a result of its reports.
After reviewing the reports, Cramer doubled his conviction that banks are worth falling behind.
“I’m still optimistic about finance, especially at investment banks like‘ Goldman Slacks ’and game changers like Wells Fargo,” he said. “After these figures, the banks have gained the dirt. Believe me, they will not stay that way.”
The following is a summary of Cramer’s reaction to the earnings reports of the five financial giants:
Goldman Sachs
- Earnings: $ 18.60 per share versus $ 10.22 per share expected by analysts surveyed by Refinitiv.
- Income: $ 17.7 billion vs. 12.6 billion euros planned.
“The numbers were so strong that I get the old one back [nickname] … I call them “Golden Slacks,” Cramer said. “If you traded to win ten times, it would be a $ 413 share … I’m betting that’s where it’s headed, especially now that Goldman has permission to recover stock.”
JPMorgan
- Earnings: $ 4.59 per share versus $ 3.10 per share expected by analysts surveyed by Refinitiv.
- Income: $ 33.12 billion vs. $ 30,522 million projected.
“For me, this was the second best report yesterday, although the market seemed to disagree as investors sold the news. But make no mistake, the figures were fantastic,” he said. “I think the decline in JP Morgan shares is a buying opportunity, simple and straightforward, and it’s clear that someone agrees because the shares have started to rebound today.”
Wells Fargo
- Earnings: According to Refinitiv, $ 1.05 in earnings per share compared to the projected 70 cents per share.
- Income: $ 18.06 million versus $ 17.5 billion projected.
“Wells Fargo roared yesterday because it’s considered more of a history of change than a bank history, which is why we actually own it because of my charitable trust,” Cramer said. “I keep telling you it’s a better buy than JP Morgan because expectations are much lower for Wells, and yesterday they made that bar low.”
Citi
- Earnings: $ 3.62 per share, compared to $ 2.60 per share, according to Refinitiv.
- Income: $ 19.3 billion, up from the expected $ 18.8 billion
“Like the banks that reported yesterday, Citi has a lot of strength when it comes to investment banking, but traditional consumer banking was much less impressive,” he said. “If I had to rank this quarter, you know what, I’d put it just below JP Morgan.”
bank of america
- Earnings: 86 cents per share, compared to the 66 cents per share expected by analysts surveyed by Refinitiv.
- Income: $ 22.9 billion, up from projected $ 22.1 billion.
“He had the worst reaction in the market. I’m going to say the market is wrong. Today it has fallen by almost 3%. I thought it was insulting,” Cramer said. “There was nothing particularly surprising in the same quarter. Don’t despair. If we get a couple of rate hikes, that’s what we need to own and we’ll finally get them.”
Disclosure: Cramer’s charity has shares in Wells Fargo.
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