Banks’ high earnings fell and the results were positive enough to stifle concern over their ratings, CNBC’s Jim Cramer said on Thursday.
Shares of large financial institutions such as JPMorgan Chase and Wells Fargo rose from last summer, far outstripping the market.
Cramer, himself a student at Goldman Sachs Investment Store, said their quarterly numbers need to be strong enough to support their current valuations.
“We have one more thing to worry about now that the earnings season has started to run. Banks are doing pretty well, even if their actions don’t necessarily reflect that,” the “Money Mad” host said.
JP Morgan, Goldman and Wells Fargo released all results on Wednesday, followed the next day by Citigroup and Bank of America. Despite the fact that each company showed higher and lower rates in the first quarter of this year, their stock transactions split as a result of their reports.
After examining the reports, Cramer doubled his belief that the banks deserve to be left behind.
“I’m still optimistic about the financial situation, especially investment banks like Goldman Slacks, and the evolution is playing out like Wells Fargo,” he said. “After these numbers, the banks have become cheap. Believe me, they will not stay that way.”
Below is a summary of Cramer’s reaction to earnings reports from the five financial giants:
Goldman Sachs
- income: $ 18.60 per share compared to $ 10.22 per share expected by analysts surveyed by Refinitiv.
- Income: $ 17.7 billion compared to the expected $ 12.6 billion.
“The numbers were so strong that they bring back the old ones [nickname] “I call them ‘golden pants,'” Cramer said. “If he traded 10 times, it would be a $ 413 share … I bet he’s heading, especially now that Goldman is allowed to buy back the stock.”
JP Morgan
- income: $ 4.59 per share compared to $ 3.10 per share expected by analysts surveyed by Refinitiv.
- Income: $ 33.12 billion compared to $ 30.52 billion expected.
“For me, this was the second best report yesterday, although the market seemed to disagree because investors sold the news. But make no mistake, the numbers were fantastic,” he said. “I think the withdrawal of JP Morgan shares is a simple and straightforward buying opportunity, and clearly someone agrees, because the action started coming back today.”
Fargo fountains
- income: According to Refinitiv, earnings per share of $ 1.05 compared to 70 cents per share.
- Income: $ 18.06 billion compared to $ 17.5 billion expected.
“Wells Fargo yelled yesterday because it’s seen more as a story of change than a bank story, which is why we actually have it for 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 absolutely eliminated the small bar.”
Read
- income: $ 3.62 per share, compared to $ 2.60 per expected share, according to Refinitiv.
- Income: $ 19.3 billion, compared to the expected $ 18.8 billion
“Like the banks that reported yesterday, Citi had a lot of strength in terms of investment banking, but traditional consumer banking services were much less impressive,” he said. “If I were to rank this quarter, you know what, I’d put it right under JP Morgan.”
Bank of America
- income: 86 cents per share, compared to 66 cents per share expected by analysts surveyed by Refinitiv.
- Income: $ 22.9 billion, compared to the expected $ 22.1 billion.
“He had the worst reaction from the market. I will say the market is wrong. Today he collapsed by almost 3%. I thought it was insulting,” Cramer said. “There was nothing particularly surprising in the quarter itself. Don’t despair. If we get a few rate hikes, this is the one we have and we’ll get them in the end.”
Disclosure: The Cramer Charity Trust owns shares in Wells Fargo.
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