Bank shares rose last week but barely missed the bank’s profit estimates -Dlight News

Bank shares rose last week but barely missed the bank's profit estimates

Anna Vocino, founder and chief executive of Eat Happy Kitchen in Santa Ynez, California, said she experienced the collapse of a Silicon Valley bank this way: On the morning of March 10, she logged into the bank’s system to set up a bill payment. Which was due on that Monday. Subsequently, her husband told the media that the bank was in trouble. About 15 to 20 minutes later, another breaking news alert about a bank collapse hit her inbox, the online interface she was working in crashed. The commotion began. She and her husband, who had several business accounts at the bank, wrote to their CPA and creditors for more information or leniency. The funds for the company, which has two employees and sells organic sauces and condiments, were within the limits of FDIC coverage, she said. But there were questions about what even that protection looked like. “I was getting emails, automated emails from Square and Shopify and Quickbooks — you name it,” she said. “Anybody I ever received an electronic transaction from or was writing to me saying your bank accounts are void. I was like: Yeah, I know. The collapse of SVB — and the collapse of Signature Bank, and the teetering and propping-up tensions of First Republic Bank FRC, -32.80% and Credit Suisse Group AG CSGN, -8.01% — have rattled markets and jolted small businesses on the main. the street But Wall Street analysts who try to forecast companies’ quarterly results — and whose forecasts often drive stock action when those results come in above or below them — have been generally quiet about financial-industry profits. At least, until now. Between March 8 and Wednesday, profit-per-share forecasts for the financial industry, and the companies that make up the S&P 500 index SPX, were overall -1.10%, barely a low mark, FactSet data showed. For the full year during that time, that profit estimate for the financial sector fell 0.8%. For the S&P 500 overall, those estimates fell 0.09%. Only three companies in FactSet’s financial sector overall — Charles Schwab Corp. SCHW, -2.54% , KeyCorp KEY, -6.11% and Comerica Inc . CMA, -8.44% — saw their earnings-per-share estimate decline more than 1% at the time, according to FactSet. “It appears that analysts are not making significant estimate cuts for other companies in the sector at this time,” FactSet senior earnings analyst John Butters said in an email Wednesday. Still, those estimates will run lower as the week progresses and there’s plenty of room for panic elsewhere. Others noted that banks may still set aside more money to cover bad loans, as concerns about inflation and cracks in the banking industry threaten to create a major cash crunch for shoppers and businesses. “They are likely to increase their provisions for loan losses, which will weigh on Q1 earnings,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “They will likely give analysts a heads-up in the coming weeks ahead of the start of earnings season.” Elsewhere, analysts have said smaller banks could absorb more financial fallout than any of their larger, distressed counterparts. Analysts at UBS noted on Thursday that almost half of the country’s credit comes from outside the country’s 25 largest banks. And they said “it’s in this small group where deposit growth and costs can be a big challenge.” Within smaller U.S. banks, “tightening of lending standards at those institutions is expected to dampen economic growth this year,” Goldman Sachs Research said in a blog post Thursday. A more recent study also found that about 190 US banks suffered from the same problems that sank SVB. Vossino said he started discounting the items a day after SVB failed in an attempt to bring in cash as he continued to have access to his money in the bank. Her customers stepped up, she said, and by Friday many of the products on the Eat Happy Kitchen website were sold out. Vosino, who is also a voiceover artist, said the switch from SVB to his new banks was scheduled to take place on Friday or Monday. Successfully withdrawing money from one bank — and waiting for the funds to accumulate at another bank — can take days, and thus has its own suspense. “Nobody wants to change banks,” she said. “A- has such pain. Nobody wants to do that. ” And amid the flood of what SVB’s collapse means for the tech world and the years of low interest rates that fueled its ascent, she said it’s worth focusing on other aspects of the bank’s collapse. “I was watching CNBC,” she said. “And the whole focus is on tech bros and Silicon Valley crashing. And I’m like: Hello? There are all these other businesses with this company.” Outside of a shake-up among the nation’s banks in earnings this week, the quiet stretch of the earnings reporting season will continue into next week. According to FactSet, only five S&P 500 companies, including one Dow 30 member, report quarterly results during the coming week. Among them: RV maker Winnebago Industries Inc. wgo, -2.07% rival Thor Industries Inc. THO, -3.04% , as well as a slowdown in RV demand will follow the results as rising interest rates and reduced price volatility. Enthusiasm for road trips when the pandemic shut down the economy. Petco Health & Wellness Co. Inc. WOOF, -3.82% and Chewy Inc. CHWY, -0.34% also reported during the week, as rising prices tested consumers’ ability to splurge on their pets. Elsewhere, General Mills Inc. Results from GIS, -0.85% may shed more light on the direction of stubbornly-high food prices. Retail Chains Express Inc. EXPR, -4.13% and Ollie’s Bargain Outlet Holdings Inc. OLLI, -0.56% also reported, as analysts try to figure out how much retailers still need to cut prices to attract shoppers increasingly uneasy about the economy. Calls to put on your calendar Nike and Foot Locker: Foot Locker Inc. and Nike Inc., both of which have tried to rely less on each other for sales in recent years, report results on Monday and Tuesday, respectively. But they will do so as demand for shoes and clothing declines, while more consumers choose to save money to pay for necessities like food and gas. Nike NKE, -0.22% reported results in December that were better than expected. But Foot Locker FL, -1.03% has cut staff, lost the athletic fashion brand in Europe and undergone an extensive executive shake-up over the years. Numbers to watch GameStop Earnings: Video-game chain GameStop Corp., the parent of Mem Stock, reports results on Tuesday. While big stock moves can come and go depending on the mood of mem traders, Wedbush analyst Michael Pachter, in a note on Thursday, expressed bigger concerns about the company. “Short-term headwinds include the potential settlement of the holiday season, hardware challenges at Microsoft and Nintendo, the impact of layoffs and an unexpected start to the non-fungible token marketplace,” he said. “Longer-term headwinds include potential liquidity challenges and changing gamer preferences with greater appetite for cloud, digital, mobile and subscription. We expect significant cash burn through at least FY23, ultimately forcing the company to issue more equity. .”

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