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Category: JPMorgan Chase (JPM), CitiGroup (C) and Bank of New York Mellon )BK)
Date: 15 July 2020 Stock price of JP Morgan: $99.45 Stock price of CitiGroup: $51.57 Stock price of Bank of New York Mellon: $36.85 Battle of the banks. We take a look at the stock performance of JPMorgan Chase, CitiGroup and Bank of New York Mellon over the last couple of years as well as investigate which one of these banks comes out on top.
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So if one had to buy one of these bank stocks now which one is the best buy? Is there a reason why the stock of JP Morgan has outperformed the other two banks or why Bank of New York Mellon has underperformed so horribly against the others?"
More About JPMorgan Chase (JPM)
JPMorgan Chase (NYSE: JPM) is one of the oldest financial institutions in the United States. With a history dating back over 200 years, here's where we stand today:
We are a leading global financial services firm with assets of $2.6 trillion.
We have a presence in over 100 markets.
We have over 250,000 employees.
We serve millions of consumers, small businesses and many of the world's most prominent corporate, institutional and government clients.
We are a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management.
Our stock is a component of the Dow Jones Industrial Average.
Below a summary of JPMorgan's latest earnings report
We are a leading global financial services firm with assets of $2.6 trillion.
We have a presence in over 100 markets.
We have over 250,000 employees.
We serve millions of consumers, small businesses and many of the world's most prominent corporate, institutional and government clients.
We are a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management.
Our stock is a component of the Dow Jones Industrial Average.
Below a summary of JPMorgan's latest earnings report
- Revenue: $33.817 billion (up from $29.481billion for the same period of the previous year)
- Revenues increased by 15% over the last 12 months
- Total non interest expenses: $16.942 billion (up from $16.246 billion for the same period of the previous year)
- Total non interest expenses increased by 4% over the last 12 months
- Some margin gains for JP Morgan as their revenues increased a lot more than their non interest expenses
- Net income: $4.687 billion (down from $9.652 billion for the same period of the previous year)
- Net income decreased by -51% over the last 12 months
- Diluted earnings per share: $1.38 (down from $2.32 for the same period of the previous year)
- PE ratio of JP Morgan Chase: 17.8
- Dividend declared: $0.90
- Dividend yield: 3.6%
- Diluted weighted-average shares outstanding: 3.081 billion (down from 3.259 billion for the same period of the previous year)
- Book value per share: $76.91 (up 4% from $73.88 for the same period of the previous year)
- Cash and cash equivalents: $20.554 billion
- Cash and cash equivalents per share: $6.67
- Cash and cash equivalents makes up 6.7% of JP Morgan Chase's market capital
- Cash and cash equivalents makes up 0.64% of JP Morgan Chase's total assets
- Cash and cash equivalents per share: $6.67
- Loans net of allowances for losses: $946.426 billion
- Loans net of allowances for losses 29.4% of JP Morgan Chase's total assets
- Goodwill: $51.867 billion
- Goodwill makes up 1.65% of JP Morgan Chase's total assets
- Goodwill per stock: $16.72
- Goodwill makes up 1.65% of JP Morgan Chase's total assets
- Stockholders equity in JP Morgan Chase: $261.262 billion
- Stockholders equity per share: $84.60
- So JP Morgan Chase is trading a 1.1 times its stockholders equity which is outside the expected range of between 2 and 4 which most firms tend to trade at.
- Stockholders equity per share: $84.60
More About CitiGroup (C)
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Overview of CitiGroup's latest earnings report
Overview of CitiGroup's latest earnings report
- Revenue: $19.766 billion (up from $17.758billion for the same period of the previous year)
- Revenues increased by 5% over the last 12 months
- Operating costs and expenses : $10.415 billion (down from $10.500 billion for the same period of the previous year)
- Operating costs and expenses decreased by -1% over the last 12 months
- Net income: $1.316 billion (down from $4.799 billion for the same period of the previous year)
- Diluted earnings per share: $0.50 (down from $1.95 for the same period of the previous year)
- PE ratio of Citigroup: 25.2
- Diluted weighted-average shares outstanding: 2.084 billion (down from 2.289 billion for the same period of the previous year)
- Book value per share: $84.41 (up 5% from $79.40 for the same period of the previous year)
- Cash and cash equivalents: $22.889 billion
- Cash and cash equivalents per share: $10.98
- Cash and cash equivalents makes up 21.8% of Citigroup's market capital
- Cash and cash equivalents makes up 1.05% of Citigroup's total assets
- Cash and cash equivalents per share: $10.98
- Loans net of allowances for losses: $658.9 billion
- Loans net of allowances makes up 29.5% of Citigroup's total assets
- Goodwill: $21.399 billion
- Goodwill makes up 0.9% of Citigroup's total assets
- Goodwill per stock: $10.26
- Goodwill makes up 0.9% of Citigroup's total assets
- Stockholders equity in Citigroup: $173.642 billion
- Stockholders equity per share: $83.3
- So Citigroup is trading a 0.602 times its stockholders equity which is well outside the expected range of between 2 and 4 which most firms tend to trade at.
- Stockholders equity per share: $83.3
More About Bank of New York Mellon (BK)
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries. As of Dec. 31, 2019, BNY Mellon had $37.1 trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).
Overview of Bank of New York Mellon's latest earnings report
Overview of Bank of New York Mellon's latest earnings report
- Total revenue: $4.010 billion (up from $3.924 billion for the same period of the previous year)
- Total revenue increased by 2.2% over the last 12 months
- Total noninterest expenses: $2.686 billion (up from $2.647 billion for the same period of the previous year)
- Total noninterest expenses increased by 1.5% over the last 12 months
- Net income: $965 million (down from -5.48% from $1.021 billion for the same period of the previous year)
- Diluted earnings per share: $1.01 (unchanged from $1.01 for the same period of the previous year)
- PE ratio of Bank of New York Mellon: 8.9
- Dividend declared: $0.31
- Dividend yield: 3.5%
- Diluted weighted-average shares outstanding: 885.862 million (down from 942.662 million for the same period of the previous year)
- Book value per share: $44.21 (up 9.7% from $40.30 for the same period of the previous year)
- Cash and cash equivalents: $4.776 billion
- Cash and cash equivalents per share: $5.39
- Cash and cash equivalents makes up 14.8% of Bank of New York Mellon's market capital
- Cash and cash equivalents makes up 1.1% of Bank of New York Mellon's total assets
- Cash and cash equivalents per share: $5.39
- Loans net of allowances for losses: $55.095 billion
- Loans net of allowances makes up 12.5% of Bank of New York Mellon's total assets
- Goodwill: $17.253 billion
- Goodwill makes up 3.9% of Bank of New York Mellon's total assets
- Goodwill per stock: $19.47
- Goodwill makes up 3.9% of Bank of New York Mellon's total assets
- Stockholders equity in Bank of New York Mellon: $43.809 billion
- Stockholders equity per share: $49.45
- So Bank of New York Mellon is trading a 0.73 times its stockholders equity which is well outside the expected range of between 2 and 4 which most firms tend to trade at.
- Stockholders equity per share: $49.45
JPMorgan Chase (JPM) vs CitiGroup (C) vs Bank of New York Mellon (BK)
The image below shows the stock price performance of JPMorgan Chase (JPM), CitiGroup (C) and Bank of New York Mellon (BK) over the last 5 years. All these firms are active in the banking and financial services industry. Their stock price performances look very similar but when one looks at the returns provided over the 5 years it is however a very different story. The summary below shows the stock price performance of the three banks in question, sorted from best to worst performer:
- JPMorgan Chase: 46.17%
- CitiGroup: 17.37%
- Bank of New York Mellon: -16.72%
So if one had to buy one of these bank stocks now which one is the best buy? Is there a reason why the stock of JP Morgan has outperformed the other two banks or why Bank of New York Mellon has underperformed so horribly against the others?
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following:
Based on this metric CitiGroup offers far more value than Bank of New York Mellon or JP Morgan. Most firms tend to trade at a ratio of between 2 and 4 times. While all these firms are trading at well below the expected range its Citi who is trading at the lowest and based on this metric offers the most value.
Next up cash as percentage of stock price:
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
Looking at the cash position of the three banks Bank of New York Mellon has the strongest cash position (as a percentage of their total assets). The cash per share gives an indication of if investors were to buy the stock now, how much of that stock price is made up by cash on their balance sheet. In this case its CitiGroup that comes out on top with almost 22% of their current stock price being made up by cash.
Lastly the overused but still useful metric, the Price to Earnings Ratio (PE):
So BNY has the lowest PE and CitiGroup by far the highest. So all things considered if we have to choose between these three banking stocks and buy on right now based on their latest earnings reported and current stock price levels we will go for Bank of New York Mellon (BK). Therefore in our battle of the banks we declare Bank of New York Mellon as the WINNER
- Price/Stockholders equity per share for CitiGroup: 0.602
- Price/Stockholders equity per share for JP Morgan : 1.11
- Price/Stockholders equity per share for Bank of New York Mellon: 0.73
Based on this metric CitiGroup offers far more value than Bank of New York Mellon or JP Morgan. Most firms tend to trade at a ratio of between 2 and 4 times. While all these firms are trading at well below the expected range its Citi who is trading at the lowest and based on this metric offers the most value.
Next up cash as percentage of stock price:
- Cash as percentage of stock price for CitiGroup: 21.8%
- Cash as percentage of stock price for JP Morgan : 6.7%
- Cash as percentage of stock price for Bank of New York Mellon: 14.8%
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
- Cash as percentage of stock price for CitiGroup: 1.05%
- Cash as percentage of stock price for JP Morgan : 0.64%
- Cash as percentage of stock price for Bank of New York Mellon: 1.1%
Looking at the cash position of the three banks Bank of New York Mellon has the strongest cash position (as a percentage of their total assets). The cash per share gives an indication of if investors were to buy the stock now, how much of that stock price is made up by cash on their balance sheet. In this case its CitiGroup that comes out on top with almost 22% of their current stock price being made up by cash.
Lastly the overused but still useful metric, the Price to Earnings Ratio (PE):
- PE for CitiGroup: 25.2
- PE for JP Morgan : 17.8
- PE for Bank of New York Mellon: 8.9
So BNY has the lowest PE and CitiGroup by far the highest. So all things considered if we have to choose between these three banking stocks and buy on right now based on their latest earnings reported and current stock price levels we will go for Bank of New York Mellon (BK). Therefore in our battle of the banks we declare Bank of New York Mellon as the WINNER