Monte Independent Investment Research Vol. LXX

Earnings Preview [banks, energy, hyperscalers, industrials], Solar Energy

Earnings Preview

• Banks

• Energy

• Hyperscalers

• Industrials

Solar Energy Fallout

Earnings Preview

This week kicks off q2’25 earnings season with the JPM & WFC kicking off this morning. Since this report was written yesterday, we’ll discuss the implications of bank earnings in next week’s Tuesday report.

I’m relatively optimistic going into this quarter’s earnings; I’m somewhat concerned that optimism outweighs my generally pessimistic outlook. The economy appears to be heating up in certain market segments as international trade begins to settle in with the new trade policies with the US. Though it is still too early to determine the full implications of trade discussions, pricing, and signs of a slowdown, I’m seeing many indicators point to minimal impact from tariff policy across our core coverage segments.

Regional Banks q2’25 Earnings Preview

We released some information last week relating to the regional banking industry. The market remains fearful of delinquencies and bankruptcy filings increasing in 2025 as a result of trade tariffs; however, bank loans thus far have experienced minimal impact to higher costs. We should have more color on the matter in q2’25 as q1’25 may have been impacted from imports being pulled forward, resulting in little-to-no impact from tariff policies.

We’ll be looking at further declines in credit quality decline and efficiency ratios. As alluded to in Friday’s newsletter covering ConnectOne Bancorp (NASDAQ: CNOB), CRE loans will pose a major risk going forward as more loans reach maturity in a heightened interest rate market. With banks tightening credit standards for loan issuances, we may see some trouble brewing for the CRE market. I’m not expecting an industry-wide fallout, but rather, a margin decline and disruption to growth.

In terms of the chain of events, I suspect Main Street will experience financial decline well before Wall Street, given the size, scale, and credit quality of these small-time lendees.

Energy q2’25 Earnings Preview

Energy will be a mixed bag for q2’25. Oil prices have been relatively challenged in the quarter while natural gas displayed durable growth when compared to the previous year’s quarter. In terms of upstream weightings, I’m underweight oil and overweight natural gas.

Oil prices have been relatively lackluster throughout the quarter with exogenous factors having minimal upward momentum on oil prices. Any positive pricing was swiftly followed by a return to the mean. A few integrated oil companies [IOCs] have warned of weaker earnings going into q2’25 reporting as a result of weaker commodity prices.

• ExxonMobil (NYSE: XOM)

• BP PLC (NYSE: BP)

• Occidental Petroleum Corporation (NYSE: OXY)

Natural gas has many positive factors at play, including increasing domestic demand, growing demand for US LNG in the EU and APAC, and a possible reduction in associated gas production due to weaker oil prices. Headline after headline has suggested electricity prices will rise as a result of the multi-year backlog for gas turbines. Though this may be true, the headlines dismiss the notion that gas turbines are currently being delivered, as there will be a bulk delivery in 2028. GE Vernova (NYSE: GEV) and Siemens (OTC: SMNEY) are two of the major gas turbine manufacturers. Overall, I’m expecting natural gas supply to remain relatively stagnant as demand picks up, potentially resulting in durable price appreciation for natural gas and more impactful production yields for gas producers.

Hyperscalers q2’25 Preview