Bank Stocks: JPMorgan Chase Trending Bullish

By Richard Cox

Banking giant JPMorgan Chase & Co. (NYSE: JPM) was incorporated in 1968 and is headquartered in New York, NY. It is a financial holding company engaged in financial and investment banking services. The company classifies its business into the following four segments: Commercial Banking; Consumer and Community Banking; Corporate and Investment Bank and Asset Management.

Its principal bank subsidiaries are JPMorgan Chase Bank, JPMorgan Chase Bank, N.A. and Chase Bank USA. Its main nonbank subsidiary is J.P. Morgan Securities LLC.  The company operates in the United Kingdom through J.P. Morgan Securities plc which is a subsidiary of JPMorgan Chase Bank, N.A.

JPM: Recent Banking Sector Developments

In a recent announcement the company propose to liquidate JPMorgan China Region Fund. On December 21, Swiss competition panel imposed CHF 33.9 million fines on JPMorgan in Swiss franc LIBOR case.

In a similar move, JPMorgan paid about $200 million towards the settlement of a U.S. DoJ and SEC probe into outsourcing in China. As of September 30, reports show the company has a 11.4% passive stake in Coty Inc., and the company obtained a business license approval from Chinese regulators to incorporate JPMorgan Asset Management (Shanghai) Ltd. The new company will provide investment and asset management consultancy services in China.

Dividend Stocks: Earnings Results

The company reported third-quarter net earnings of $6.3 billion (or $1.58 per share) on October 14, beating the Reuters estimate of $1.39 per share. Third quarter net revenue was $25.5 billion, up 8 percent, while analysts were anticipating $24.00 billion, according to market research compiled by easyMarkets.  Going forward, investors will be watching these reports for further indications of whether or not current trends can continue. 

Tangible book value per share now comes in at $51.23, up 8 percent, and quarterly average core loans were up 15 percent when compared to last year (2 percent compared to last quarter).  Third quarter adjusted overhead ratio was 57% versus 56% in last quarter. Analyst estimates the full year 2017 earning per share at $6.45, above the trailing-twelve-month earnings per share of $5.80.

Market Performance

JPM rewarded the investors handsomely in the year 2016 with a gain of 30%. It is trading near $86, the highest level in last five years. In early January 2012, it was trading around $36.The company is a regular dividend payer. During last five years dividend has increased from $0.25 per share to present level of $0.48 per share. At the current price it giving a yield of 2.23% and price to earnings ratio of 14.87 on trailing twelve-month earning per share.

JPMorgan Chase has given money investors a 9.87% annualized return on equity in last 5 year while the industry average is 23.38% during the same period; source Reuters.  Similarly, it gives 0.88% annualized return on assets during the last five years. Sales have a negative growth rate of -4.38% annualized in last 5 years despite the industry growth rate of 15.22% during the same period. But the analysts are optimistic about the stock and recommending Outperformer on Reuters.

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