Admittedly, bank stocks were amongst the most affected stocks when the coronavirus pandemic hit last year. Low-interest rates had already been an issue as the sector started off in 2020. With the March crash came devastating blows to stock prices of big players in the financial sector. However, the broader financial industry has made an admirable recovery in that time. Most people would think of banks when the topic of financial stocks comes up. Well, it is also important to note that the industry encompasses a wide array of stocks. These range from stocks in asset management and insurance to accounting and payment processing stocks as well. Overall, you might be curious as to how this sector of the stock market is doing now.
On one hand, you have the digital payment processing companies that have surged thanks to growing e-payment adoption. Companies like Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) have more than doubled in share price in the past year. In the event that pandemic conditions worsen, there would be more room for this part of the finance sector to grow moving forward. On the other hand, we have top bank stocks such as JP Morgan (NYSE: JPM). Now, JPM stock has mostly recovered to pre-pandemic figures. That’s partly thanks to efforts in bolstering its digital banking and tailwinds from positive vaccine news. Regardless, there are top financial stocks to watch that can benefit investors no matter how the current pandemic pans out.
Eagle-eyed investors have likely caught on to this. Moreover, the Federal Reserve has allowed banks to resume share buybacks this quarter. As most of these banks are in the midst of earnings season, it could be a good time to take a look at how they have been doing. Could these best bank stocks make huge strides in 2021?
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First up is Goldman Sachs which has been hard at work diversifying its streams of revenue throughout the past year. Evidently, this has played out well for the company as it recorded fantastic figures in its recent quarter fiscal yesterday. Goldman surpassed expectations on the top and bottom line by a landslide. Analysts had projected earnings per share of $7.50 while the company reported a $12.08 figure. Adding to that, it exceeded top-line revenue expectations by over $1 billion. In light of all this, GS stock is now sitting comfortably at a share price of $294.20 as of Tuesday’s closing.
Throughout the fiscal year, Goldman reported a record net revenue of $9.42 billion from its investment banking section. The bank cites record revenue in equity underwriting and debt underwriting as key driving factors here. In fact, it was ranked #1 worldwide in announced and completed mergers and acquisitions. Additionally, Goldman reported a 43% rise in its global markets revenue from the previous year. This added up to $21.15 billion and marked its highest annual net revenues in the past decade. If that wasn’t enough, its consumer banking arm also saw a 40% year-over-year increase. Considering its collaboration with Apple (NASDAQ: AAPL) on the Apple Card, this is not surprising.
Overall, saying that Goldman had a phenomenal fourth quarter is a grave understatement. This is a likely explanation as to why the stock is trading at its current value. Given its current momentum, do you think GS stock will continue to hit new all-time highs this year?Bank of America Corporation
Similar to our earlier entry, Bank of America or BAC for short reported its fourth-quarter financials yesterday as well. The bank saw $5.5 billion in net income for the quarter. It also posted $0.59 earnings per share which beat general analysts’ projections. BAC also reported total revenue of $20.1 billion for the quarter which marked a 10% year-over-year decrease. For now, BAC stock is looking at gains of over 80% since the March selloffs. Investors could be wondering if it still has room to grow moving forward.
If we take a closer look at its recent quarter fiscal, it is apparent that BAC is still recovering from coronavirus-related impacts. CEO Brian Moynihan said, “In the fourth quarter, we continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity.” For one thing, the incoming round of stimulus cheques and positive vaccine news does bode well for BAC. With more discretionary dollars at hand and the economy rebounding, spending would naturally increase. With that in mind, some would argue that BAC stock could see more growth for the foreseeable future.
On top of all that, the company also made another key announcement yesterday. It declared a regular quarterly cash dividend of $0.18 per share. The dividend will be payable to shareholders on March 26. Furthermore, there was also authorization to repurchase $2.9 billion in common stock through March 31. This authorization adheres to the maximum allowed for the period by the Federal Reserve Board. All in all, BAC appears to be making the most of its current position. Do you think all this will benefit BAC stock in the long run?Morgan Stanley
The New-York based banking giant, Morgan Stanley, has recovered tremendously since the stock market crash in March. At the very least, MS stock seems to show this at gains of 169% in that time. Regardless, it would definitely be in the limelight now. This could be the case as investors size it up against its peers amidst earnings season for big banks. To point out, Morgan Stanley just released its latest financials earlier today.
Diving right into it, the company reported a solid fourth quarter and a record fiscal year as well. Impressively, it crushed Wall Street analysts’ estimates to say the least. Morgan Stanley raked in $13.6 billion in net revenue for the quarter which overshot estimates of $11.08 billion. It also posted earnings per share of $1.81 which marks a 39% year-over-year jump. Notably, the company saw year-over-year jumps of 46% in investment banking revenue and 32% in sales and trading revenue over the same period. Given these strong quarterly earnings, Morgan Stanley appears to be firing on all cylinders.
Aside from that, the company has also been bolstering its portfolio throughout 2020. In October, it acquired wealth management company E*Trade. This made it the largest wealth manager in the U.S. with assets of about $3.3 trillion. Another power play by the company would be the acquisition of investment manager Eaton Vance (NYSE: EV). This agreement will see Morgan Stanley add another $500 billion in assets to its portfolio. The acquisition is slated for completion by the second quarter of 2021 and will leave Morgan Stanley with $1.2 trillion in overall assets to manage. Should Morgan Stanley play its cards right, do you see big gains for MS stock this year?