Earnings Preview: JPMorgan Chase & Co.

JPMorgan Chase & Co. (JPM), a financial holding company, provides various financial services worldwide. Its Investment Bank segment offers various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services for corporations, financial institutions, governments, and institutional investors.

It is scheduled to report its Q2 2012 results on July 13, 2012, before the market opens. In this article, I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' developments.

Technical Overview

The stock has a market capitalization of $130.87B and is currently trading at $34.38 with a 52-week range of $27.85 - $46.49. The stock performance year to date: 5.69%. It is currently trading below 20, 50 and 200 SMA.

Key Metrics

Trailing P/E: 7.64
Forward P/E: 6.49
Price/Sales: 1.45
Price/Book: 0.72
PEG Ratio: 1.00
Total Debt: 729.91B
Annual dividend yield: 3.20%
Return on Equity: 10.15%
Return on Assets: 0.83%

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter, it reported $1.31 EPS, beating analyst estimates of $1.18.

The consensus EPS estimate is $0.79 based on 29 analysts' estimates, down from $1.27 a year ago. Revenue estimates are $21.91B, down from $27.41B a year ago. The median target price by analysts for the stock is $46.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

On June 13, 2012, Oppenheimer reiterated Outperform rating for the company.
On June 6, 2012, Barclays reiterated Overweight rating for the company.
On May 20, 2012, the company was downgraded from Market Perform to Underperform at JMP Securities.
On May 13, 2012, the company was upgraded from Hold to Buy at Standpoint Research.
On May 10, 2012, the company was downgraded from Buy to Hold at Stifel Nicolaus.
On May 10, 2012, the company was downgraded from Outperform to Market Perform at FBR Capital.
On April 16, 2012, Barclays reiterated Overweight rating for the company.
On March 22, 2012, the company was downgraded from Buy to Hold at Standpoint Research.
On February 28, 2012, Standpoint Research initiated Buy rating for the company.

Latest Developments

On July 6, 2012, Reuters reported that a U.S. judge has ordered JPMorgan Chase & Co. to explain why the court should not force the bank to turn over 25 internal emails demanded as part of an investigation into whether it manipulated electricity markets in California and the Midwest.
On July 4, 2012, Reuters reported that U.S. energy regulators have subpoenaed JPMorgan Chase & Co. to produce 25 internal emails as part of an investigation into whether the bank manipulated electricity markets in California and the Midwest.
On July 3, 2012, Reuters reported that JPMorgan Chase & Co.'s One Equity Partners, the company's private investment arm, will buy technology services firm M*Modal Inc. for about $1.1 billion in cash.
On June 25, 2012, Integra Mining Ltd. announced that JPMorgan Chase & Co. and its affiliates have ceased to be shareholders of the Company effective April 9, 2012.
On June 22, 2012, Reuters reported that Ratings agency Moody's downgraded 15 banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities, but banks criticized the move as backward looking.
On June 21, 2012, Reuters reported that JPMorgan Chase & Co.'s asset management business has created a new unit, which will oversee $100 billion in assets under management and incorporate teams from the company's investment management and wealth management divisions.
On June 19, 2012, Reuters reported that Japan has excluded Nomura Holdings, Inc. from working on the government's sale of roughly $6 billion worth of JAPAN TOBACCO INC. shares.
On June 11, 2012, REN Redes Energeticas Nacionais SGPS SA (REN) announced that on June 11, 2012 JP Morgan Securities Ltd, a subsidiary of JPMorgan Chase & Co, acquired 28,131,422 ordinary shares class A, corresponding to 5.272% of REN's share capital .
On June 6, 2012, Reuters reported that U.S. bank regulators will review whether JPMorgan Chase & Co. executives should have to give back compensation due to the bank's failed hedging strategy that has produced at least $2 billion in losses.
On May 23, 2012, Reuters reported that the head of the U.S. Securities and Exchange Commission told lawmakers on Tuesday that her agency is probing JPMorgan Chase & Co.'s financial reporting and emphasized that big banks are required to publicly disclose changes to the models they use to measure risk.
On May 22, 2012, Reuters reported that the U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009.
On May 21, 2012, Reuters reported that JPMorgan Chase & Co.'s CEO Jamie Dimon took another step in the wake of $2 billion loss, or more, on derivatives by announcing on Monday that the Company will quit spending capital on stock buybacks.
On May 19, 2012, Reuters reported that The Commodity Futures Trading Commission (CFTC) has opened an investigation into possible wrongdoing at JPMorgan Chase & Co in connection with the bank's multi-billion-dollar trading loss, a source familiar with the probe told Reuters.
On May 17, 2012, Reuters reported that JPMorgan Chase & Co., CEO Jamie Dimon took another step that showed humility and caution in the wake of a stunning $2 billion loss, or more, on derivatives by announcing on Monday that the Company will quit spending capital on stock buybacks.
On May 16, 2012, Reuters reported that The FBI has opened an inquiry into the multibillion-dollar trading losses at JPMorgan Chase, stepping up pressure on the bank after key U.S. agencies said they were looking into high-risk trades that first drew regulators' attention last month.
On May 16, 2012, Glancy Binkow & Goldberg LLP announced that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased the common stock of JPMorgan Chase & Co. (JPMorgan or the Company) between April 13, 2012 and May 11, 2012, inclusive (the Class Period), seeking to pursue remedies under the Securities Exchange Act of 1934.
On May 15, 2012, JPMorgan Chase & Co. announced that its Board of Directors declared a quarterly dividend of $0.30 per share on the outstanding shares of the corporation`s common stock.
On May 15, 2012, Bernstein Liebhard LLP announced that a securities class action lawsuit has been commenced in the United States District Court for the Southern District of New York on behalf of a class of purchasers of JPMorgan Chase & Co. common stock during the period between April 13, 2012 and May 11, 2012.
On May 15, 2012, Robbins Geller Rudman & Dowd LLP (Robbins Geller) announced that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of JPMorgan Chase & Co. (JPMorgan) common stock during the period between April 13, 2012 and May 11, 2012, (the Class Period).
On May 11, 2012, JPMorgan Chase & Co. announced that it has suffered $2 billion or more in trading losses. A May 11, 2012 Wall Street Journal article indicates the 'losses stemmed from wagers gone wrong in the bank's Chief Investment Office' and involved losses in derivative positions.
On May 11, 2012, Levi & Korsinsky announced that it is investigating potential claims on behalf of purchasers of JPMorgan Chase & Co. (JPMorgan or the Company)securities concerning possible breaches of fiduciary duty.
On May 7, 2012, Rompres reported that five new United States companies will be listed on the Alternative Trading System of the Bucharest Stock Exchange International Department, starting on May 10, 2012.
On April 25, 2012, JPMorgan Chase & Co. announced that Freepoint Commodities LLC, has entered into a definitive agreement to acquire J.P. Morgan Metals & Concentrates LLC, merchant of physical base metal concentrates and copper cathodes.
On April 19, 2012, Reuters reported that a federal judge on Wednesday dismissed claims against Goldman Sachs Group Inc, JPMorgan Chase & Co. and 40 other defendants that they helped mislead investors in General Electric Co's $12.2 billion stock offering in 2008.
On April 4, 2012, Reuters reported that according to the Commodity Futures Trading Commission (CFTC) JPMorgan Chase & Co will pay $20 million to settle charges that it unlawfully handled customer segregated funds at Lehman Brothers Holdings Inc. The CFTC said that for about 22 months, ending with Lehman's bankruptcy in September 2008, JPMorgan had improperly extended intra-day credit to Lehman Brothers based in part on customers' segregated funds Lehman had deposited at the bank.
On March 20, 2012, Reuters reported that JPMorgan Chase & Co. agreed to pay $150 million to settle a lawsuit by pension funds and other investors accusing the U.S. bank of imprudently investing their cash in a risky debt vehicle that collapsed in 2008.
On March 15, 2012, JPMorgan Chase & Co. announced that it declared a dividend on the outstanding shares of the corporation's Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series I in the amount of $395.00 per share (which is equivalent to $39.50 per related Depositary Share).
On March 15, 2012, Prairie Downs Metals Limited announcedthat JPMorgan Chase & Co. and its affiliates have ceased to be a substantial holder in the Company as of January 25, 2011.
On March 8, 2012, JPMorgan Chase & Co and AirPlus International announced the formation of a strategic partnership to help multinational organizations optimize processes and strengthen control of their corporate card and travel expense management programs.
On February 28, 2012, PetroNeft Resources plc announced that PetroNeft was notified on 24 February 2012 by J.P. Morgan Securities Limited that JPMorgan Chase & Co., and its controlled undertakings, no longer hold an interest in the issued share capital of PetroNeft Resources Plc.
On February 9, 2012, Dow Jones reported that JPMorgan Chase & Co and Wells Fargo & Co. have reserved for their respective $5.3 billion share of the settlement big banks reached with the federal government and state attorneys general.
On February 6, 2012, Reuters reported that JPMorgan Chase & Co has agreed to pay $110 million to settle consumer litigation accusing it of charging excessive overdraft fees.
On January 31, 2012, General Electric Co announced that it will acquire the existing card program assets of approximately $900 million from JPMorgan Chase & Co. Financial terms were not disclosed.
On January 20, 2012, Reuters reported that State Street Corporation, JPMorgan Chase & Co. and Ameriprise Financial, Inc. are among the finalists in the bidding process for Deutsche Bank AG's asset management division.
On January 18, 2012, The Madison Square Garden Co and JPMorgan Chase & Co. announced they have expanded their marketing partnership, making Chase the Official Card of MSG and providing Chase credit and debit cardmembers with exclusive access to events and experiences across MSG's venues and sports and entertainment franchises.

Competitors

JPMorgan Chase & Co. operates in Money Center Banks industry. The company could be compared to Bank of America Corporation (BAC), Barclays PLC (BCS), Citigroup, Inc. (C), and U.S. Bancorp (USB). Below is the table comparison of the most important ratios for these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one-year period.

Click to enlarge

JPM data by YCharts

Competitors' Latest Development

On July 5, 2012, Reuters reported that ratings agency Moody's changed its outlook for Barclays PLC's standalone bank financial strength rating to negative from stable, citing the resignations of Senior Executives including Chief Executive Bob Diamond in the wake of an interest rate-rigging scandal.
On July 3, 2012, Bank of America Corp announced that the Board of Directors has authorized dividends on preferred stock. A quarterly cash dividend of $0.38775 per depositary share on the 6.204% Non-Cumulative Preferred Stock, Series D, is payable on September 14, 2012 to shareholders of record as of August 31, 2012.
On July 3, 2012, Barclays PLC announced the resignation of Bob Diamond as Chief Executive Officer (CEO) and a Director of Barclays with immediate effect. Marcus Agius will become full-time Chairman and will lead the search for a new Chief Executive.
On July 2, 2012, Barclays PLC announced the resignation of its Chairman, Marcus Agius. The search for a successor both from within the existing Board members and from outside will be led by Sir John Sunderland and will commence today.
On June 29, 2012, Dow Jones reported that the Financial Services Authority on Friday confirmed settlements with the U.K.'s four banks after it found 'serious failings' in the sale of interest-rate hedging products in what has been one of the worst weeks ever for the sector.
On June 27, 2012, Barclays PLC announced that it has reached settlements in relation to investigations with the Financial Services Authority (FSA), the US Commodity Futures Trading Commission (CFTC) and the United States Department of Justice Fraud Section (DOJ) (together the Authorities) into submissions made by Barclays and other panel members to the bodies that set various interbank offered rates.
On June 26, 2012, Citigroup Inc announced that it has been awarded a contract renewal of its fund services to Victory Capital Management and to the Victory Funds. Citi will continue to provide administration and accounting services to Victory Capital Management and serve as the global custodian and transfer agent to the Victory Funds.
On June 25, 2012, Reuters reported that Julius Baer Gruppe AG in talks with Bank of America Corporation about buying Merrill Lynch's non-U.S. wealth management unit, is particularly interested in its presence in Asia and Latin America.
On June 22, 2012, Reuters reported that Ratings agency Moody's downgraded 15 banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities, but banks criticized the move as backward looking.
On June 22, 2012, Reuters reported that Ratings agency Moody's downgraded 15 banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities, but banks criticized the move as backward looking.
On June 22, 2012, Reuters reported that Ratings agency Moody's downgraded 15 banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities, but banks criticized the move as backward looking.
On June 21, 2012, Reuters reported that Bank of America Corp directors have reached a definitive settlement of litigation by shareholders, who accused the bank of overpaying for Merrill Lynch & Co, a federal judge said on Wednesday.
On June 19, 2012, Reuters reported that Julius Baer Gruppe AG was in talks about buying Bank of America Corp's non-U.S. wealth management operations, reported to be worth up to $2 billion.
On June 19, 2012, US Bancorp announced that it has declared a quarterly dividend of $0.195 per common share, payable July 16, 2012, to shareholders of record at the close of business on June 29, 2012.
On June 15, 2012, Bank of America Corp announced the Board of Directors authorized a regular quarterly dividend of $18.125 per share on the 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L. The dividend is payable on July 30, 2012 to shareholders of record as of July 1, 2012.
On June 12, 2012, Indophil Resources NL announced that Bank of America Corporation and its related bodies corporate have ceased to be shareholders of the Company effective June 7, 2012.
On June 8, 2012, The Globe and Mail reported that Barclays PLC plans to buy a 49.9% stake in Bank Windhoek Ltd. The value of the potential deal has not been disclosed as Barclays PLC was yet to start talks with Bank Windhoek Ltd that holds more than USD 2 billion in assets.
On May 31, 2012, Dow Jones reported that Citigroup Inc isn't planning to sell its Polish unit, Bank Handlowy w Warszawie SA. Other information of the deal were not disclosed.
On May 31, 2012, Morgan Stanley announced that it has advised Citigroup Inc. that on June 1, 2012, it intends to give notice that it is exercising its right to purchase an additional 14% of Morgan Stanley Smith Barney Holdings LLC (MSSB).
On May 25, 2012, Citigroup Inc announced that it has sold 404 million common shares in Akbank T.A.S. (Akbank) through an equity offering representing 10.1% of the equity interest in the Company for TRY5.24 per share.
On May 25, 2012, Bank of America Corp announced that it and Barclays Bank PLC have entered into an agreement with Equity Residential and Lehman Brothers Holdings Inc pursuant to which Bank of America and Barclays will sell their remaining 26.5% interest in Archstone, a privately held owner, operator and developer of multifamily apartment properties, for a purchase price of $1.58 billion to Lehman pursuant to Lehman's exercise of its right of first offer.
On May 22, 2012, Reuters reported that the U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009.
On May 22, 2012, Reuters reported that Credit Suisse Group AG had won the latest auction of mortgage-linked collateralized debt obligations from The New York Fed's Maiden Lane III portfolio of assets assumed from American International Group, Inc. during the insurer's bailout in 2008.
On May 22, 2012, Reuters reported that the U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009.
On May 22, 2012, Reuters reported that Credit Suisse Group AG had won the latest auction of mortgage-linked collateralized debt obligations from The New York Fed's Maiden Lane III portfolio of assets assumed from American International Group, Inc. during the insurer's bailout in 2008.
On May 19, 2012, Reuters reported that Citigroup Inc and its Chief Executive Vikram Pandit on Friday won a dismissal of New York real estate developer Sheldon Solow's lawsuit accusing them of securities fraud for hiding the bank's risks during the 2008 financial crisis.
On May 10, 2012, Citigroup Inc announced that it has been appointed by Phase4 Ventures, London based venture capital firm, to provide document safekeeping and fund administration services.
On May 10, 2012, Reuters reported that the New York Federal Reserve sold all its TRIAXX collateralized debt obligations from a portfolio of assets that was used in the government bailout of insurer American International Group, Inc. to Bank of America Corp's Merrill Lynch, following a competitive bid process with eight other Wall Street firms.
On April 13, 2012, Reuters reported that Bank of America Corporation and US Bancorp have been sued by a Chicago pension fund that said they failed to protect investors in their roles as trustees for mortgage backed securities for Washington Mutual Inc. A lawyer whose firm represents investors in both cases has said she believed Pauley's watershed decision was the first to let mortgage backed securities investors pursue claims against a trustee under the 1939 federal Trust Indenture Act. Saying it invested in six of those trusts, the fund accused both banks of failing to take possession of loan files or ensuring they were complete, or requiring Washington Mutual to fix or buy back defective loans.
On March 13, 2012, US Bancorp announced that the Board of Directors of U.S. Bancorp has approved a 56% increase in the dividend rate on U.S. Bancorp common stock to $0.78 on an annualized basis, or $0.195 on a quarterly basis.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

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

Earnings Preview: JPMorgan Chase & Co.

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