Delta Beats Earnings, JPMorgan Falls Short

Wednesday morning marks the first big day of earnings — action that will likely set the tone for the next set of banks reporting Thursday morning. The action was mixed, with Delta coming out firmly as the morning’s top performer, and $BBBY as the worst.

Blackrock ($BLK):

• EPS of $9.35 vs. expected EPS of $8.70
• Revenue of $4.70 vs. expected revenue of $4.67B
• Blackrock told shareholders that an “11% growth in technology services revenue” was a driving factor in the company’s quarterly growth.
• The stock is up 0.18% in the premarket — far less than the implied move of 3.47%.

JPMorgan ($JPM):

• EPS of $2.63 vs. expected EPS of $2.69
• Revenue of $31.59B vs. expected revenue of $30.53B
• That represents a 42% decrease in profit for the bank.
• JPMorgan lost $902M to building credit reserves in anticipation of loan losses 
• JPMorgan lost an additional $524M to geopolitical issues stemming from Russia
• These two combined losses represented an overall loss of $0.36 from the EPS, said the bank.
• JPMorgan remains the largest U.S. lender.
• The stock has fallen to $127.12 in the premarket, down 3.36% — a move that is (so far) smaller than the implied move of 4.07%.

Asked about the possibility of a recession, CEO Jamie Dimon said he remains, “optimistic on the economy”, adding that, “consumer and business balance sheets as well as consumer spending remain at healthy levels.” Dimon was quick to remind listeners that it wasn’t all sunshine and rainbows, noting, “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues, and the war in Ukraine.”

Delta Airlines ($DAL):

• EPS of -$1.23 vs. expected EPS of -$1.27
• Revenue of $9.35B vs. expected revenue of $8.92B.
• The cost of jet fuel is up more than 50% YTD and more than 100% since last year. 
• Delta expects to turn a profit this year due to an increase in bookings as well as a hike in the cost of airfare.
• Delta expects second quarter capacity to be 84% of that seen in 2019, before the pandemic.
• The stock currently trades at $41.16 in the premarket, up 6.56% — considerably more than the implied move of 4.9%.

Asked by Joe Kernan of Squawk Box whether the Covid-19 “bailout” meant that Delta owed it to taxpayers to keep prices low, CEO Ed Bastion essentially said no. “Delta is focused on doing what’s right for stakeholders,” said Bastion. 

Bed Bath and Beyond ($BBBY):

• EPS of -$0.92 vs. expected EPS of $0.03)
• Revenue of $2.05B vs. expected revenue of $2.08B
• Comparable sales down 12% — more than expected. 
• Shares of the retailer are down 35% year over year. 
• $BBBY traded down 8.79% on the news — a large move, but still less than the implied move of 16.47%.

The CEO of Bed Bath and Beyond said that factors such as “the supply chain, the omicron variant, and geopolitical turbulence” weighed on consumer confidence, uncovering, “more vulnerabilities than we could have foreseen at this stage in our transformation.” 

The CEO went on to say that 30% of Bed Bath and Beyond’s “key category inventory” was “not available for sale because it’s trapped upstream… it just wasn’t ready yet.”

It wasn’t all bad though. The CEO said Bed Bath and Beyond’s transformation strategy is on track, and that it’s “just delayed at the moment — not derailed.”

Thursday’s Earnings

Source: Earnings Whispers

What can we expect tomorrow? More banks! Wells Fargo ($WFC), Goldman Sachs ($GS), Citigroup ($C), Ally ($ALLY), and Morgan Stanley ($MS) will all be reporting Thursday morning! Additionally, Taiwan Semiconductor ($TSM) will be reporting as the first of many semiconductor stocks to release their earnings this season. Investors will be listening closely to see if the same geopolitical factors have taken their toll on these banks (a la JPMorgan), or if, like Blackrock, the rise in technology-services were able to stem the tide.