July 11 to 15 | Ready For a New Earnings Season? US Banks and TomTom on the Agenda

The first half of 2022 has been difficult for investors. Indeed, the world stock markets experienced their worst first-half for 20 years: $13 trillion in market capitalisation has gone up in smoke! Investors have also struggled with weak macroeconomic forecasts and raging inflation, hitting a record high of 8.6% in the eurozone.

The good news? Earnings season is just around the corner that could bring surprising results. And don’t forget that falling markets bring plenty of opportunities for long-term investors. Now, more than ever, it’s important to put emotions aside and focus on valuations! 

No stress for US banks

The US Federal Reserve has now hiked rates three times, including a historic increase of 0.75 points (a move not seen since 1994). Now all eyes are on the banks. So far, they’ve passed the “stress test” with flying colours. These tests have been conducted by the Fed every year since 2008, to ensure that American banking establishments are able to withstand a hypothetical recession, and even a potential financial crisis.

These tests also allow US banks to estimate the amounts they will be able to distribute to shareholders, through dividend payments and share buybacks. According to Bloomberg, they should amount to $80 billion this year.

  • JPMorgan, the largest bank in the US, will kick things off with its second quarter results this Thursday, July 14th. The bank’s CEO, Jamie Dimon, warned of an economic “hurricane” following the Fed’s monetary decisions and the war in Ukraine, so some investors might be cautious. Analysts expect earnings-per-share to come in at $2.95, (down 21.9% YoY), and revenue of $32 billion (up 6.8% YoY).
  • Well Fargo will report its second quarter results on Friday, July 15th. Analysts expect earnings per share of $0.91, (-56% year-on-year), and revenue of $17.76 billion (-12.4%).
  • Finally, Citigroup will also present its results on the same day. Analysts expect earnings per share of $1.65, (-42% year-over-year), and revenue of $18 billion. According to the Financial Times, the bank is in negotiations with several Russian players, with a view to selling its local retail banking activities.

Want to know more about earnings season and why it’s important for your portfolio? Check out our full guide on earnings season.

Navigate the markets with Tomtom

Ready for a summer roadtrip? Then you’ll need a GPS to help you out! Luckily, TomTom is here and the company will report earnings this Friday, July 15th. The Dutch company recently announced a 10% reduction in its workforce and the automation of its mapping activities. TomTom is hoping to gain market share against Google Maps by improving the quality of its software. One to watch?

Alphabet stock split

Amazon did it last June. Now it’s Alphabet’s turn to split its stock. On Friday, July 15, the price of Alphabet’s stock will be divided by 20. If you’re an Alphabet shareholder, you’ll now own 20 shares instead of one.

This doesn’t make any difference to the overall value of the shares. Instead of holding a single share worth $2,160, shareholders will hold 20 shares worth $108 each. So, why do companies do this?

Many big US tech companies have seen their market capitalisation rise sharply since their IPO (Alphabet was 18 years ago!), so their stock prices can become unaffordable, especially for smaller investors. By dividing their price, it makes the purchase of their shares much more accessible. Want to learn more about this process? Check out our full article, or video, on the topic.

The good news? With BUX, you don’t have to wait for stock splits to invest in your favourite businesses. Instead, you can use fractional investing, which means you can invest in major American tech companies (and many more!) from just €10, by purchasing fractional shares and adding them to your Savings Plan.

Economic and earnings calendar

Monday – Retail sales in Italy (May). Conference Board US Employment Trends Index (June).

Tuesday – ZEW Economic Sentiment Index in Germany (July). PepsiCo results.

Wednesday – Consumer price index in Germany, Spain, France and the United States (June). Industrial production in Europe (May). Fed Beige Book. Half-year results for Delta Airlines.

Thursday – JPMorgan Chase and Morgan Stanley half-year results.

Friday – Car registrations in Germany, France and Italy (June). Consumer price index in Italy (June). Retail sales and industrial production in the United States (June). Half-year results for BlackRock, Citigroup, Well Fargo and Tomtom.

We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.