The Build-Up To Big Bank Earnings

The banking industry will take center stage on Thursday, when several of its biggest names check in with quarterly earnings. Strong results could get some of these companies off on the right foot for 2012. Since a significant amount of volatility is bound to come with these announcements, traders who are equipped with sound technical strategies are the most likely to profit from the results.

Under Siege

On Thursday, prior to the opening bell, Bank of America (BAC) will release its Q4 results. Wall Street is calling for EPS of $0.23 versus $0.04 in the company’s Q4 in 2010. Total revenue is expected to rise 7.5%.

Bank of America has benefitted in recent quarters from a decrease in its net charge-offs. It has also shored up its balance sheet by selling non-core assets and building its Tier 1 equity ratio. Despite these positive trends, the stock has been hammered in the marketplace. BAC shares have tumbled 56.7% over the course of the past year.

Morgan Stanley (MS) was also taken to the woodshed in 2011, but its stock price has been retracing lost ground. On Thursday morning, the company is expected to announce a Q4 net loss of $0.57 per share versus a profit of $0.43 in the prior year quarter. Shares of MS have declined 42.6% since this time last year.

Steadier Footing

One bank that has seen its stock price on more stable ground is BB&T (BBT). The consensus among analysts is that the company will report a 76.7% pop in Q4 EPS despite a 4.5% decrease in total revenue on a year-over-year basis when it announces its earnings before the market open on Thursday.

BB&T is coming off of its strongest quarter in three years, as credit quality and interest income both improved. The company has also succeeded in cutting its nonperforming assets by $900 million during the last two quarters. BBT shares are down 2.0% from a year ago.

One other stock for traders to keep an eye on going into Thursday is American Express (AXP). Analysts are calling for the company to weigh in with an 11.4% advance in EPS on an 8.2% uptick in total revenue when compared to the year ago quarter. Shares of AXP are up 7.6% over the course of the past 52 weeks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.