Goldman Sachs just reported Q1 earnings this morning. JPMorgan, Citi, and Wells Fargo follow tomorrow. Bank of America and Morgan Stanley hit Wednesday. This is the week where the biggest financial institutions in the world show their hand — and right now, most of them are trading at lower valuations than they were at the end of 2025, even as earnings estimates have actually gone up.
That combination — lower price, higher expected earnings — is the textbook definition of a better deal. Forward price-to-earnings ratios across the major banks have compressed meaningfully in recent months, driven by a cocktail of geopolitical anxiety, inflation concerns tied to rising oil prices, and rate uncertainty. But banks aren’t energy companies. Their core business — collecting deposits, making loans, and earning net interest income — doesn’t break when crude hits $100. In many scenarios, rising rates (which the Iran conflict is keeping elevated) actually help bank profitability, particularly on the lending side.
Three banking analysts who spoke to MarketWatch ahead of this earnings week pointed to the same thing: the market is pricing in a lot of fear that may not show up in the actual results. GS already trades at a discount to its historical forward P/E. So does JPMorgan. The case for these names isn’t that everything is fine — it’s that the price already reflects a lot of bad news that hasn’t materialized yet. If earnings this week come in better than the whisper numbers (which are admittedly low), the setup for a bounce is real. Long-term investors who’ve been waiting for a reason to get into high-quality financials at a discount may not get a better invitation than this week’s earnings cycle.
