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- Revenues and net income decreased from last year in four of the five business segments.
- The stock is at a point right now where the dividend yields 2.82% which is difficult to ignore.
- The bank continues to be hobbled by legal expenses making it difficult to increase net income, but the bank has a revenue problem as well.
- JPM had a record year in 2014 but that wasn’t good enough for investors.
- Profits continue to grow despite a terrible environment for banks and investors, I believe, have incorrectly lumped JPM in with BAC and C.
- JPM should trade with WFC and that means a price target of $73, or 30% higher from here.
JPMorgan Dropped Below My Target Purchase Price, But I Didn't Buy
- The company reported revenues and net income which were all lower than what they were last year.
- CEO Jamie Dimon blamed numerous regulators for constantly attacking the bank on the same issues.
- The stock has dropped some 10% on the year thus far, but that isn't enough for me to begin nibbling at it.
- For the fourth quarter, JPMorgan announced revenues of $23.6 billion, which reported a 2% year on year and 6% sequential drop.
- Diluted earnings per share for the company declined by 8% annually and 13% sequentially and were reported at $1.19 per share.
- For the full year ended 2014, JPMorgan managed to generate revenues of $97.9 billion, which was a 2% drop from the revenues that the bank had reported a year.
- The net income for the year amounted saw a 21% increase and was reported at $21.76 billion. Earnings per share amounted to $5.34, which was 22% higher.
- Book value has noted an improvement on a yearly basis as it increased by 7%. The bank’s capital ratio was healthy at 11.4%.
Update: JPMorgan Disappoints On Earnings As Low Rates And Litigation Costs Continue
- JPM earned $1.19/share, below estimates of $1.31/share and $1.30/share last year.
- Results were below my expectations due as the interest rate spread remained low and litigation costs remained high.
- While delayed in execution, I believe the mid-term thesis remains intact and JPM should perform once rates rise and litigation costs normalize.
JPMorgan Weakness Demonstrates Cost Of Oil Selloff
- Banks that engage in trading are being pounded by the losses in oil.
- JPMorgan Chase continues to trade near its own book value.
- Focus on banks that do banking like Wells Fargo and strong regionals in areas outside the oil patch.
- JPMorgan Chase reported Q4'14 earnings.
- The stock remains a Buy.
- The original investment thesis remains in tact that solid earnings will eventually push bank stocks higher as legal expenses decline going forward.
Update: JPMorgan's Double-Digit Return PossibilityEli Inkrot • Thu, Jan. 15
- JPMorgan recently announced 2014 earnings results.
- Revenue declined, but profitability was higher.
- Perhaps just as pertinent is the idea that JPMorgan’s double-digit return possibility remains largely intact.
JPMorgan: Don't Make The Mistake To Sell Because Of A Dip In Q4 Earnings
- JPMorgan reported fourth quarter results that disappointed investors.
- JPMorgan's net income dove 7% and was impacted by higher legal costs and weaker CCB results.
- Despite those negative effects, a lot of positive things were reported that unfortunately are either ignored or taken for granted.
- JPMorgan is an attractively valued bank now that shares have sold off.
Legal Battles Continue To Drag On JPMorgan's Profit
- $990 million in legal expense causes JPMorgan to underperform.
- Consumer confidence helps JPMorgan’s consumer categories.
- Loan balances higher as rate expectations remain uncertain.
- JPMorgan Chase offers the investor the opportunity to buy an excellent business at a reasonable price.
- Despite political and financial headwinds, JPMorgan Chase continues to post excellent financial results.
- With JPM performing well in the current low interest rate environment, investors stand to to reap large rewards when interest rates rise.
- Loan growth was nice to see, but ongoing NIM erosion and less expense leverage than hoped for set the stage for another disappointment in core operating profits.
- Higher capital requirements may prompt management to consider a breakup, but the on-the-ground impact of these rules might not be as large as it first appears.
- Long-term ROE and near-term ROTCE both support a fair value in the mid-$60s, though large banks may remain limited by weak near-term interest rate momentum.
- The earnings release from JPMorgan Chase, even excluding a large legal charge, is not very exciting.
- A bank built to succeed in an environment of credit inflation, may not be the appropriate structure for the transformations now taking place in the economy.
- The bank's return on equity seems to be stuck around 10 percent during the current economic recovery so it is just covering its cost of capital.
JP Morgan Chase Is Down 4%: Disaster Or Opportunity?
- JP Morgan Chase saw its stock price tumble today after its 4th quarter earnings release.
- The company saw EPS of just $1.19, well below analyst expectations of $1.31.
- Has the company's price decline made the stock more attractive, or should investors be wary of Jamie Dimon and JP Morgan Chase?
Does The JPMorgan Whisper Number Indicate Investor Confidence?
- The whisper number is $1.32, three cents behind the analysts' estimate.
- JPMorgan has a 73% positive surprise history (having topped the whisper in 37 of the 51 earnings reports for which we have data).
- The overall average post earnings price move is 'opposite' (beat the whisper number and see weakness, miss and see strength) when the company reports earnings.
- The stock continues to drop in price but I'm not buying any shares until it reaches $58.
- The stock remains inexpensively valued based on 2015 earnings estimates even though those estimates have declined by 0.3% since the last time I wrote about the stock.
- The company pays a decent dividend that yields 2.7% but I'd like to see it more towards 3%.
- JPMorgan has been broken up before.
- A break-up would reduce Great Recession capital requirements and allow higher profits.
- It would also leave U.S. bankers at a disadvantage in global competition so it won't happen.
- The CFO recently warned that fixed income revenues were going to be light for the fourth quarter.
- C-Suite member responsible for improving procurement efforts and increasing margins has departed.
- The bank is doing its part to make amends on a settlement reached back in 2013 with respect to consumer aid for the bank's part in the housing crisis.
- An analyst provides a compelling valuation benefit for breaking up JPMorgan Chase.
- The top five financial institutions continue to control a larger share of aggregate assets, subjecting the companies to large regulatory hurdles.
- The analysis suggests JPMorgan Chase and other big banks are out of favor and provide a compelling investment opportunity, compared to a reason to split up the company.
- I expected the bank to make it back into my Portfolio Super Bowl but it missed the final playoff spot by 75 basis points to Citi.
- The company recently had the ex-dividend date for a $0.40 per share quarterly dividend which will be payable in January.
- With the collapse of every commodity I don't doubt the bank is taking every opportunity to exploit potential growth in the market.
Today, 1:31 PM
- JPMorgan (JPM -0.6%) looks like it was on the right side of the action when the SNB shocked the markets 10 days ago by abandoning its support of the euro/franc floor.
- Bloomberg's Julia Verlaine reports the Bank of Dimon made between $250M and $300M as the franc soared higher following the move.
- The profit at JPMorgan comes as other lenders - reportedly Deutsche Bank, Barclays, and Citigroup - lost hundreds of millions in the tumult.
- Previously: Banks lose millions on SNB move (Jan. 16)
- Previously: Citi reportedly loses more than $150M on Swiss franc move (Jan. 16)
Sat, Jan. 24, 4:48 PM
- The financial sector is off to a worse start to the year than even the energy names, with the XLF down 3.9% YTD vs. the XLE's 3.2% decline. The S&P 500 is roughly flat. The SPDR KBW Bank ETF (NYSEARCA:KBE) is off 7.5%, and the Regional Bank ETF (NYSEARCA:KRE) is lower by 6.9%.
- Q4 earnings results haven't been wonderful, but financial names had been savaged well before those reports started coming out. Instead there's a difficult regulatory regime that won't quit, and - for now - it's looking like "wait'll next year" for the rising interest rates that were supposed to drive profit margins higher. The 10-year/2-year spread - already pretty low at 150 basis points to start the year - has narrowed to 137 bps.
- A partial roll call of banks: Bank of America (NYSE:BAC) -12.1% YTD, Citigroup (NYSE:C) -10.1%, JPMorgan (NYSE:JPM) -9.4%, Morgan Stanley (NYSE:MS) -9.4%, Regions Financial (NYSE:RF) -14.7%, KeyCorp (NYSE:KEY) -4.5%, PNC Financial (NYSE:PNC) -5.4%, Bank of New York (NYSE:BK) -9.1%, Capital One (NYSE:COF) -6%, Discover (NYSE:DFS) -13.6%.
- Other spread-starved sector names: MetLife (NYSE:MET) -9.8%, AIG (NYSE:AIG) -8%, Prudential (NYSE:PRU) -10.8%, Schwab (NYSE:SCHW) -9.9%.
- Some of what's working in financials: Blackstone (NYSE:BX) +6.7%, E*Trade (NASDAQ:ETFC) +1.2%, WisdomTree (NASDAQ:WETF) +12.3%, Legg Mason +2.8%.
Thu, Jan. 22, 4:48 PM
- The JPMorgan (NYSE:JPM) boss received $20M in 2014, equal to 2013, but last year's pay included a cash bonus of $7.4M - his first cash bonus in three years. Bonuses in 2012 and 2013 were limited to stock as the board slapped Dimon on the wrist for presiding over the London Whale mess.
- For all 2014, Dimon received $1.5M in salary, $11.1M in restricted stock, and the aforementioned $7.4M cash bonus.
- JPMorgan common stock gained 7% last year, lagging the S&P 500's Financials Index by 600 basis points.
Wed, Jan. 21, 2:54 PM
- Though it was not JPMorgan's (JPM +0.3%) intention to do so, rules a federal appeals court, the bank clearly authorized counsel to file papers in 2008 making a loan to GM unsecured instead of secured.
- While secured creditors were repaid in full during GM's bankruptcy, unsecured creditors took losses.
- This particular case deals with JPMorgan unintentionally releasing a lien on GM fixtures and equipment. During bankruptcy proceedings, JPMorgan initially won its argument that the security interest was still in effect, but the appeals court today reversed that decision, noting the paperwork had been reviewed by the bank managing director responsible for the loan, as well as counsel.
Wed, Jan. 21, 9:09 AM
- The Global Credit Index business - a 12-person unit focused solely on trading credit index products like CDS and ETFs - is the first of its kind at a major investment bank, says JPMorgan (NYSE:JPM). It's been set up in response to a boom in customer demand for trading indexes instead of individual bonds, where liquidity has been drying up.
- Credit ETFs are a $197B market today vs. $58B five years ago, says the bank, and indexes now make up 42% of the CDS market vs. 29% in 2010, according to the Depository Trust and Clearing Corporation.
Tue, Jan. 20, 2:25 AM
- Fidelity Investments and eight other big money managers, including BlackRock (NYSE:BLK), BNY Mellon (NYSE:BK), JPMorgan (NYSE:JPM), and T. Rowe Price (NASDAQ:TROW), are close to launching a dark pool.
- The project is aimed at creating a private trading venue for the benefit of mutual fund shareholders in an effort to reform trading by cutting costs and weeding out high-frequency traders.
- Despite coming under increased regulatory scrutiny, dark pools have recently seen a major jump in trading volume.
- Previously: Nasdaq considers joining the dark side (Jan. 12 2015)
Wed, Jan. 14, 9:20 AM
- Touting the benefits the bank gets from its platform, scale, and franchise, JPMorgan (NYSE:JPM) boss Jamie Dimon scoffs at the idea (thanks to a Goldman report) his bank should be broken up. CFO Marianne Lake earlier: "You don't undertake major surgery when generating strong returns."
- Webcast and presentation
- On the sharp drop in oil prices, Dimon doesn't have too much concern. While certain companies and real estate in oil boom areas will get hurt, the overall effect on the economy will be mixed as falling oil prices puts more money in consumers' pockets. Banks with heavy exposure to energy will take lumps, but JPMorgan has the size and diversity to shrug things off.
- Dimon: I'm surprised when people are surprised by moves in commodity prices. "Commodity prices have been on the move my whole life."
- Previously: Dimon: "Banks are under assault" (Jan. 14)
- Previously: Trading slump, legal charges hit JPMorgan results (Jan. 14)
- Previously: JPMorgan Chase EPS of $1.19 (Jan. 14)
- Shares -3.1% premarket amid a broad slump in equity prices
Wed, Jan. 14, 8:26 AM
- Speaking to reporters ahead of his bank's 8:30 ET conference call, Jamie Dimon: "Banks are under assault ... We have five or six regulators coming at us on every issue."
- Dimon is no doubt a fan of MetLife's move yesterday to sue the government rather than putting its tail between its legs and quietly accepting the FSOC's curious designation of the insurer as a non-bank SIFI.
- JPM -1.6% premarket
- Webcast and presentation
- Previously: Trading slump, legal charges hit JPMorgan results (Jan. 14)
Wed, Jan. 14, 7:22 AM
- Q4 included a $990M after-tax legal expense; backing that out, headline EPS would have been $1.54 vs. $1.19 reported and estimates for $1.31.
- Q4 Consumer & Community Banking net income of $2.179B vs. $2.448B a year ago on revenue of $10.949B vs. $11.439B. Net interest income of $7.1B down marginally from a year ago. Provision for credit losses of $950M vs. just $72M a year ago. Noninterest expense of $6.411B vs. $7.321B thanks to continued job cuts in mortgage banking. Mortgage banking net income of $338M down from $593M a year ago.
- Corporate & Investment Bank - excluding DVA adjustments - net income of $1.1B vs. $2.2B a year ago on revenue of $7.6B vs. $8.2B. Investment banking fees of $1.8B up 8% Y/Y. Fixed income markets revenue of $2.5B down 23% - excluding business simplification, including the sale of certain operations, fixed income markets revenue fell 14%. Noninterest expense of $5.6B up 14% Y/Y thanks in part to higher legal expense.
- Commercial Banking net income of $693M vs. $711M a year ago on revenue of $1.770B vs. $1.876B.
- Asset Management net income of $540M vs. $581M a year ago on revenue of $3.2B, flat from last year.
- Conference call at 8:30 ET
- Previously: JPMorgan Chase EPS of $1.19 (Jan. 14)
- JPM -2.3% premarket
Wed, Jan. 14, 7:00 AM
Tue, Jan. 13, 5:30 PM
Tue, Jan. 13, 3:21 PM
- 2015 has opened much like 2014, with interest rates doing the exact opposite of what most expected, and falling sharply. It's a tough start for bank investors who have been counting on higher interest rates to help boost earnings for a number of years.
- In the meantime, deposits keep rolling in, and the pace of lending growth isn't quick enough to absorb all the money. In 2014, loan balances rose 4.4%, but securities holdings popped 12%, and cash assets jumped 22%.
- The good part of falling yields are unrealized gains on those security portfolios - negative a year ago, they're were in the green by about $15B on Dec. 31. More good news, says Goldman's Richard Ramsden: Valuations. The big banks are priced at about 9.9x estimated 2016 earnings, allowing for some nice upside if and when rates do decide to go higher.
- Reporting Q4 results tomorrow are JPMorgan (JPM) and Wells Fargo (WFC -0.8%), and on Thursday are Bank of America (BAC -1.4%) and Citigroup (C -0.9%).
Fri, Jan. 9, 12:24 PM
- The Diversified Return Emerging Markets Equity ETF (NYSEARCA:JPEM) seeks to provide investors with enhanced risk-adjusted returns and to help financial advisors keep clients invested in equities over the long term.
- "We believe that J.P. Morgan (NYSE:JPM) has emerging markets capabilities and investment insights that will be attractive to investors, and this product is an important additional step in delivering those capabilities, with an eye toward better risk-adjusted returns," said Robert Deutsch, Global Head of ETFs for J.P. Morgan Asset Management in a press release.
- The FTSE Emerging Diversified Factor Index will be employed in this fund, featuring a unique risk framework to distribute risk across regions and sectors and a multi-factor stock filter to rank and select stocks based on value, quality and momentum.
- The SPDR MSCI Emerging Markets Quality Mix ETF (NYSEARCA:QEMM) will likely be the most direct competitor for this new ETF.
Wed, Jan. 7, 7:33 AM
- SolarCity (NASDAQ:SCTY) is partnering with JPMorgan (NYSE:JPM) to finance more than $350M in solar power projects with a new investment fund.
- The fund is the second created by the two companies, and a follow-up to a fund created in 2013 to finance approximately $170M projects.
- JPM +0.9% premarket
- Previously: SolarCity, BofA partner on solar financing program (Dec. 11 2014)
Mon, Jan. 5, 4:10 PM
- The bank has agreed to pay about $100M in lawsuits brought by counterparties, market participants, and others who claim damage by supposed efforts to rig the foreign exchange markets, reports the FT.
- Revealed in court filings today and still requiring court approval, the settlement shows JPMorgan's (JPM -3.1%) desire to lay the manner to rest, say the FT's sources. Eleven other banks are also defendants in the suit. Together, the twelve had asked for dismissal in May, and the court has yet to rule on it.
- JPMorgan has already paid $660M to settle global probes of forex markets and still faces investigations by the DOJ and New York's Department of Financial Services.
Mon, Jan. 5, 1:25 PM
- "We view Wells Fargo (WFC -2.7%) as a core bank holding, but shares have reached our price target and we believe sentiment is now overwhelmingly positive after leading returns in 2014 (+21%, #1 among the top 50 banks)," says Baird's David George, who earlier downgraded the stock from Outperform to Neutral.
- Put the money in another bank? Not so quick, says George, suggesting the Fed could tighten later and be less aggressive than most expect, disappointing those hoping for higher rates to boost profits. Other than Wells Fargo, George sees sentiment highest in PNC Financial (PNC -2.7%), SunTrust (STI -3.9%), and U.S. Bancorp (USB -2.2%).
- Asset-sensitive names like Comerica (CMA -3.7%) and Zions (ZION -3.4%) lagged in 2014, but estimates still look to high.
- Top ideas would be Fifth Third (FITB -2.7%), Capital One (COF -2.4%), and JPMorgan (JPM -3%), but George is having a tough time finding value in the sector.
- Previously: Longtime Wells Fargo bull rings the register (Jan. 5)
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