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Category: Stock Market and JP Morgan Chase
Date: 14 April 2020 Stock Price: $90.61 We take a look at the 1st quarter earnings report of their 2020 fiscal year of JP Morgan Chase on of the oldest financial institutions in the world who has seen a significant hit to their bottom line due to the Coronvirus pandemic that is hitting firms and economies across the world really hard.
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About JP Morgan Chase
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.
Overview of JP Morgan Chase's 1st quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenue: $28.251 billion (up from $29.123 billion for the same period of the previous year)
- Revenues decreased by -3% over the last 12 months
- Total non interest expenses: $16.850 billion (up from $16.395 billion for the same period of the previous year)
- Operating costs and expenses increased by 3% over the last 12 months
- Some margin squeeze on JP Morgan as their revenues declined while their non interest expenses increased
- Net income: $2.865 billion (down from $9.175billion for the same period of the previous year)
- Net income decreased by -69% over the last 12 months
- Net income decreased by -69% over the last 12 months
- Diluted earnings per share: $0.78 (down from $2.65for the same period of the previous year)
- PE ratio of JP Morgan Chase: 29.2
- Dividend declared: $0.90
- Dividend yield: 3.9%
- Diluted weighted-average shares outstanding: 3.100 billion (down from 3.308 billion for the same period of the previous year)
- Book value per share: $75.78 (up 6% from $71.78 for the same period of the previous year)
- Cash and cash equivalents: $24 billion
- Cash and cash equivalents per share: $7.74
- Cash and cash equivalents makes up 8.51% of JP Morgan Chase's market capital
- Cash and cash equivalents makes up 0.76% of JP Morgan Chase's total assets
- Loans net of allowances for losses: $992.131 billion
- Loans net of allowances for losses 31.6% 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
- 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.
- For perspective, the S&P 500 has a price to book ratio of 3.34. Read more about the S&P 500 here
JP Morgan Chase's management commentary on their 1st quarter 2020 earnings results
Jamie Dimon, Chairman and CEO, commented: “My heart goes out to the communities and individuals, including healthcare workers and first responders, most deeply hit by the COVID-19 crisis. Throughout our history, JPMorgan Chase has built its reputation on being there for clients, customers and communities in the most critical times. This unprecedented environment is no different. We will do everything in our power to help the world recover from this global crisis.”
Dimon added: “The company entered this crisis in a position of strength, and we remain well capitalized and highly liquid - with a CET1 ratio of 11.5% and total liquidity resources of over $1 trillion. And JPMorgan Chase performed well in what was a very tough and unique operating environment - growing deposits in every line of business and providing loans as we extended credit and served as a port in the storm for our clients and customers. In the first quarter, the underlying results of the company were extremely good, however given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8B, resulting in total credit costs of $8.3B for the quarter.”
Dimon added: “The company entered this crisis in a position of strength, and we remain well capitalized and highly liquid - with a CET1 ratio of 11.5% and total liquidity resources of over $1 trillion. And JPMorgan Chase performed well in what was a very tough and unique operating environment - growing deposits in every line of business and providing loans as we extended credit and served as a port in the storm for our clients and customers. In the first quarter, the underlying results of the company were extremely good, however given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8B, resulting in total credit costs of $8.3B for the quarter.”
Dimon commented on the results: “The first quarter delivered some unprecedented challenges and required us to focus on what we as a bank could do - outside of our ordinary course of business - to remain strong, resilient and well-positioned to support all of our stakeholders. In Consumer & Community Banking, we have remained focused on meeting our customers’ needs. Approximately three quarters of our 5,000 branches have been open - all with heightened safety procedures and many with drive-through options - and the vast majority of our over 16,000 ATMs remain open. In March alone, we opened half a million new accounts for our card customers and extended over $6 billion of new and increased credit lines, and we were active in Home Lending and Auto. We lent over $500 million to small businesses in the month and we’re now actively supporting the SBA’s Paycheck Protection Program. For the quarter, we continued to see flows into both client investment assets and deposits.”
Dimon continued: “We continued to support our wholesale clients throughout this challenging period, as they drew over $50 billion on their existing lines. We also provided over $25 billion of new credit extensions in March for companies most impacted by the crisis and helped our clients execute record Investment Grade bond issuances this quarter. In Commercial Banking, we partnered closely with clients on their liquidity needs, increasing loans $25 billion and deposits $40 billion in the quarter. The Corporate & Investment Bank turned in another solid quarter with record Markets revenue, as we helped clients navigate extremely tough and volatile market conditions, and we maintained our #1 rank in Global IB fees as clients turned to us for financing and advice. And in Asset & Wealth Management, we saw strong growth in both loans and deposits, we took in $75 billion in liquidity flows, and more importantly we proactively reached out and helped clients manage their risk. In addition, JPMorgan Chase made a $50 million commitment to help address the immediate humanitarian crisis, as well as the long-term economic challenges that the most vulnerable people face. And the firm announced a $150 million loan program to help community partners get capital to underserved small businesses and nonprofits, particularly in the hardest hit communities.”
Dimon concluded: “I want to thank our more than 250,000 employees for remaining steadfast in helping our clients, customers, communities and governments and continuing to operate with the highest standards every day. I’m proud of the extraordinary effort by our call center employees, traders, bankers, portfolio managers, technology and operations teams across the globe. I also want to thank Daniel Pinto, Gordon Smith, our Operating Committee and our senior leaders for the exceptional leadership they have shown under the most difficult of circumstances. Finally, the countries and citizens of the global community will get through this unprecedented situation, undoubtedly stronger for it. Together, we will rise to the challenge.”
Dimon continued: “We continued to support our wholesale clients throughout this challenging period, as they drew over $50 billion on their existing lines. We also provided over $25 billion of new credit extensions in March for companies most impacted by the crisis and helped our clients execute record Investment Grade bond issuances this quarter. In Commercial Banking, we partnered closely with clients on their liquidity needs, increasing loans $25 billion and deposits $40 billion in the quarter. The Corporate & Investment Bank turned in another solid quarter with record Markets revenue, as we helped clients navigate extremely tough and volatile market conditions, and we maintained our #1 rank in Global IB fees as clients turned to us for financing and advice. And in Asset & Wealth Management, we saw strong growth in both loans and deposits, we took in $75 billion in liquidity flows, and more importantly we proactively reached out and helped clients manage their risk. In addition, JPMorgan Chase made a $50 million commitment to help address the immediate humanitarian crisis, as well as the long-term economic challenges that the most vulnerable people face. And the firm announced a $150 million loan program to help community partners get capital to underserved small businesses and nonprofits, particularly in the hardest hit communities.”
Dimon concluded: “I want to thank our more than 250,000 employees for remaining steadfast in helping our clients, customers, communities and governments and continuing to operate with the highest standards every day. I’m proud of the extraordinary effort by our call center employees, traders, bankers, portfolio managers, technology and operations teams across the globe. I also want to thank Daniel Pinto, Gordon Smith, our Operating Committee and our senior leaders for the exceptional leadership they have shown under the most difficult of circumstances. Finally, the countries and citizens of the global community will get through this unprecedented situation, undoubtedly stronger for it. Together, we will rise to the challenge.”
JP Morgan Chase (NYSE: JPM) stock price history
The image below, obtained from Google, shows the stock price history JP Morgan Chase over the last 5 years. And it's been a very good time for JP Morgan Chase stockholders. 5 years ago the stock was trading at around $55.90 a stock and its currently trading at $140.24 a stock. That's a impressive return of 150.08% returned to JP Morgan Chase stockholders over the last 5 years.
The stock of JP Morgan Chase is trading at very close to its 52 week high of $141.10 than it is to its 52 week low of $98.09 which to us is an indication that the momentum and sentiment of JP Morgan Chase stock is very positive at the moment.
The stock of JP Morgan Chase is trading at very close to its 52 week high of $141.10 than it is to its 52 week low of $98.09 which to us is an indication that the momentum and sentiment of JP Morgan Chase stock is very positive at the moment.
Recent coverage of JP Morgan Chase
The extract below discusses the latest regarding JP Morgan Chase as obtained from TheStreet.com
JPMorgan Chase & Co (JPM) posted notably weaker first quarter earnings Tuesday as coronavirus-related charges trimmed the bottom line of the biggest U.S. lender. JPMorgan said earnings for the three months ending in March were pegged at 78 cents per share, down nearly 63% from the same period last year and firmly south of the last Street forecast of $1.99 per share. Group revenues fell 4.4% to $28.3 billion, the bank said.
Corporate and investment banking charges topped $951 million for the quarter, JPMorgan said, as a near $900 million charge linked to a program of inter-company bridge loans lowered its first quarter earnings by 22 cents. JPMorgan also boosted its capital buffer, which cushions the bank against potential losses, in order to absorb an estimated $8.3 billion wave of credit losses.
Read the full article here
JPMorgan Chase & Co (JPM) posted notably weaker first quarter earnings Tuesday as coronavirus-related charges trimmed the bottom line of the biggest U.S. lender. JPMorgan said earnings for the three months ending in March were pegged at 78 cents per share, down nearly 63% from the same period last year and firmly south of the last Street forecast of $1.99 per share. Group revenues fell 4.4% to $28.3 billion, the bank said.
Corporate and investment banking charges topped $951 million for the quarter, JPMorgan said, as a near $900 million charge linked to a program of inter-company bridge loans lowered its first quarter earnings by 22 cents. JPMorgan also boosted its capital buffer, which cushions the bank against potential losses, in order to absorb an estimated $8.3 billion wave of credit losses.
Read the full article here
JP Morgan Chase (NYSE: JPM) latest stock valuation
So what is JP Morgan Chase stock worth based on the release of their latest earnings report? Based on JP Morgan Chase latest earnings report our valuation models provide a target (full value) price for JP Morgan Chase stock at $141.20 a stock (down slightly from our 4th quarter 2019 earnings report valuation of JP Morgan Chase). We therefore believe that the stock of JP Morgan Chase is undervalued at its current price of around $91. The sharp sell off in world markets and JP Morgan's stock price has provided investors with a good long term buying opportunity.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $141.20 Therefore we believe a good entry point into JP Morgan Chase's stock is at $127.10 or below.
We expect the stock of JP Morgan Chase to surge once world economies starts reopening after the Covid-19 pandemic eases.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $141.20 Therefore we believe a good entry point into JP Morgan Chase's stock is at $127.10 or below.
We expect the stock of JP Morgan Chase to surge once world economies starts reopening after the Covid-19 pandemic eases.
Next earnings release date for JP Morgan Chase
It is expected that JP Morgan Chase (NYSE: JPM) 2nd quarter 2020 earnings report will be released in the middle of July 2020