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Category: Stock Market and JP Morgan Chase
Date: 15 July 2020 Stock Price of JP Morgan: $98:21 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of JP Morgan Chase on of the oldest financial institutions in the world. Revenues increased by 15% compared to the same quarter of the previous year, however net income declined by -51% compared to the same period of the previous year as provision for credit losses surges by 420% to $5.828 billion
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I want to thank our employees around the world for their exceptional work under the most difficult of circumstances over the past several months- Jamie Dimon, Chairman and CEO"
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 2nd quarter 2020 earnings report
Data below refers to the latest quarter's data unless specified otherwise:
- 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
- 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
- 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 2nd quarter 2020 earnings
Jamie Dimon, Chairman and CEO, commented: “I want to thank our employees around the world for their exceptional work under the most difficult of circumstances over the past several months. As one of the world’s largest financial institutions, our actions are critical to keep the global economy going - from processing $6 trillion in payments each day worldwide to keeping three-quarters of our nearly 5,000 branches open - and safe - to meet individuals’ financial needs. During these unprecedented times, JPMorgan Chase remains resilient and steadfast in using all of our resources to support our colleagues, clients and communities across the globe.”
Dimon added: “Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy. However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm. We ended the quarter with massive lossabsorbing capacity - over $34 billion of credit reserves and total liquidity resources of $1.5 trillion, on top of $191 billion of CET1 capital, with significant earnings power that would allow us to absorb even more credit reserves if needed. This is why we can continue to serve all of our stakeholders and to pay our dividend - unless the economic situation deteriorates materially and significantly.”
Dimon added: “Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy. However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm. We ended the quarter with massive lossabsorbing capacity - over $34 billion of credit reserves and total liquidity resources of $1.5 trillion, on top of $191 billion of CET1 capital, with significant earnings power that would allow us to absorb even more credit reserves if needed. This is why we can continue to serve all of our stakeholders and to pay our dividend - unless the economic situation deteriorates materially and significantly.”
Dimon commented on the results: “We earned $4.7 billion of net income in the second quarter despite building $8.9 billion of credit reserves because we generated our highest quarterly revenue ever, which demonstrates the benefit of our diversified global business model. Record Markets revenue (up 79%) and Investment Banking fees (up 54%) in the Corporate & Investment Bank more than offset interest rate headwinds and reduced consumer activity. In Consumer & Community Banking, deposits and client investment assets continued to grow (up 20% and 9%, respectively) as we addressed our customers’ needs remotely as well as in our branches. Card sales volumes are down but have been consistently trending upward since April. We remained active in Home Lending on the strength of our digital platform, and Auto originations picked up in the second half of the quarter driven by pent up demand in states that are re-opening. We maintained our #1 rank in Global IB fees and grew our year-to-date share to 9.8% with strength across the franchise, including in Commercial Banking. The CB also grew loans 13% to $234 billion and deposits were up 41% as we helped clients manage their liquidity needs. In Asset & Wealth Management, AUM grew 15% driven by $124 billion of net inflows into liquidity and long-term products as we helped clients navigate market volatility.”
Dimon concluded: “We are fully committed to doing our part both in promoting the safety of our employees and customers and helping the economies of the world recover from the impact of the ongoing COVID-19 crisis, including helping to drive policies and programs for the benefit of all of society and create opportunity for those who have been left out of the economy for far too long.”
Dimon concluded: “We are fully committed to doing our part both in promoting the safety of our employees and customers and helping the economies of the world recover from the impact of the ongoing COVID-19 crisis, including helping to drive policies and programs for the benefit of all of society and create opportunity for those who have been left out of the economy for far too long.”
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 $69 a stock and its currently trading at $98.21 a stock. That's decent return of 42.3% provided to JP Morgan Chase stockholders over the last 5 years.
The stock of JP Morgan Chase is trading at closer to its 52 week low of $76.91 than it is to its 52 week high of $141.10 which to us is an indication that the momentum and sentiment of JP Morgan Chase stock is negative at this point in time.
The stock of JP Morgan Chase is trading at closer to its 52 week low of $76.91 than it is to its 52 week high of $141.10 which to us is an indication that the momentum and sentiment of JP Morgan Chase stock is negative at this point in time.
JP Morgan Chase (JPM) stock vs Citi Group (C) stock over the last 5 years
The image below shows the stock price performance of JP Morgan Chase (JPM) and Citi Group (C) over the last 5 years. And as the image shows the stock price trends of these two banking giants are very similar. Over the last 5 years the stock of JP Morgan Chase (JPM) increased by 42.^6% while the stock of Citi Group declined by -14.6% over the same period of time. Thus the stock of JPM has easily outperformed that of Citi over the last 5 years.
Recent coverage of JP Morgan Chase (JPM)
The extract below discusses the latest regarding JP Morgan Chase as obtained from Investors.com
Bank stocks largely fell on Tuesday, after JPMorgan Chase (JPM) said it was bracing for double-digit unemployment through the first half of next year on expectations of "much more protracted" pain, as rising U.S. coronavirus cases re-close the economy, while Wells Fargo (WFC) said it was slashing its dividend.
The announcements arrived as those banks, as well as Citigroup (C), reported earnings for the second quarter — a period in which big job additions, stimulus aid and efforts to revive the economy clashed with a spike in Covid-19 infections, clouding financial forecasts. JPMorgan CFO Jennifer Piepszak, during the bank's second-quarter earnings call with analysts, said the months of May and June will end up being "easy" bumps in the road. The economy, she said, will confront the "moment of truth in the months ahead." "Savings are up. Incomes are up. Home prices are up," JPMorgan CEO Jamie Dimon said. "You will see the effect of this recession. You're just not going to see it right away."
Read the full article here
Bank stocks largely fell on Tuesday, after JPMorgan Chase (JPM) said it was bracing for double-digit unemployment through the first half of next year on expectations of "much more protracted" pain, as rising U.S. coronavirus cases re-close the economy, while Wells Fargo (WFC) said it was slashing its dividend.
The announcements arrived as those banks, as well as Citigroup (C), reported earnings for the second quarter — a period in which big job additions, stimulus aid and efforts to revive the economy clashed with a spike in Covid-19 infections, clouding financial forecasts. JPMorgan CFO Jennifer Piepszak, during the bank's second-quarter earnings call with analysts, said the months of May and June will end up being "easy" bumps in the road. The economy, she said, will confront the "moment of truth in the months ahead." "Savings are up. Incomes are up. Home prices are up," JPMorgan CEO Jamie Dimon said. "You will see the effect of this recession. You're just not going to see it right away."
Read the full article here
JP Morgan Chase (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 $127.70 a stock (down from our 1st quarter 2020 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 $98. The sharp sell off in world markets and JP Morgan's stock price in recent months 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 price (full value price) which in this case is $127.70 Therefore we believe a good entry point into JP Morgan Chase's stock is at $114.90 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 price (full value price) which in this case is $127.70 Therefore we believe a good entry point into JP Morgan Chase's stock is at $114.90 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 (JPM)
It is expected that JP Morgan Chase (JPM) 3rd quarter 2020 earnings report will be released in the middle of July 2020