Earnings Previews: Ally, Citizens Bank, Morgan Stanley and More

As the new earnings season marches along, several financial sector companies will be reporting. We have already posted a summary of Thursday morning’s action, when three financial sector firms will be reporting earnings: Bank of America, Citigroup and BlackRock. We also previewed four other notable earnings due out Thursday morning: Delta Air Lines, PepsiCo, Rite Aid and United Healthcare.

Here are previews of five financial companies reporting before markets open Friday morning. Our coverage of two nonfinancial earnings also set for release Friday morning is contained in a separate story.

Ally

Ally Financial Inc. (NYSE: ALLY) finished 2020 with a share price gain of nearly 21%, after dropping 60% at the depths of the COVID-19 trough. Since its March 2020 low, the shares are up more than 310%. Ally is an online-only bank that prospered from the lockdowns related to the pandemic, and it plans to expand beyond its primary business of auto lending into mortgage lending.

Of the 17 analysts covering Ally, 12 rate the stock a Buy or Strong Buy, four rate the shares at Hold and one rates the stock at Underperform. The consensus price target on the stock is $54.58, and shares traded Wednesday at $48.12, implying upside potential of 13.4%. At the high target of $64, the upside potential is 33%.

Analysts expect Ally to post earnings per share (EPS) of $1.14, far better than last year’s first-quarter loss per share of $0.44. Revenue is forecast to rise 23.3% to $1.74 billion.

The stock currently trades at around 10.1 times expected 2021 EPS, 8.5 times estimated 2022 EPS and 6.0 times estimated 2023 earnings. The stock’s 52-week range is $13.29 to $48.34, and Ally pays an annual dividend of $0.76 (yield of 1.62%).

Bank of New York Mellon

Shares of Bank of New York Mellon Corp. (NYSE: BK) have gained about 39% over the past 12 months, topped by a 14% gain so far in 2021. In the roughly 15.5 months since January of last year, the shares have traded essentially flat. The bank’s asset management business is expected to post flat or slightly higher revenue than a year ago, and interest revenue is likely to be lower. BNY, as it is known, is reducing expenses, just about all it can do in this low-interest-rate world to boost profits.

Of the 20 analysts covering the stock, only six rate the shares Buy or Strong Buy. Twelve rate the stock Hold and two have an Underperform rating. The consensus price target on the stock is $53.13, and at a recent price of around $48.70, the upside potential is around 9.1%. At the high target of $61, the potential upside is more than 25%.

Wall Street is forecasting first-quarter EPS of $0.87, down 17% compared to the year-ago quarter. Revenue is forecast to fall by 6.4% to $3.85 billion.

The stock currently trades at about 12.3 times expected 2021 EPS, 10.5 times estimated 2022 earnings and 9.1 times estimated 2023 earnings. The stock’s 52-week range is $31.24 to $49.13. BNY pays an annual dividend of $1.24 (yield of 2.57%).

Citizens Bank

Over the past 12 months, Citizens Financial Group Inc. (NYSE: CFG) has posted a share price gain of nearly 128%. Since January, the stock price has jumped almost 29%. The bank’s online brand, Citizens Pay, has about 5 million customers, more than either Lending Club or SoFi, and some analysts believe that building out its online brand into a more modern fintech offering is a logical next step for Citizens.

Analysts are pretty evenly split on the bank, with 11 of 23 rating the stock a Buy or Strong Buy. The consensus price target on the stock is $49.32, and the shares traded at around $45.50 on Wednesday, implying a potential upside of about 8.4%. At the high target of $56, the upside potential is 23%.

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