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Category: Stock Market and JP Morgan Chase (JPM)
Date: 14 October 2020 Stock Price of JP Morgan (JPM): $100.78 We take a look at the 3rd quarter earnings report of their 2020 fiscal year of JP Morgan Chase on of the oldest financial institutions in the world. Revenues for the quarter was pegged $29.147 billion, largely flat compared to the same quarter of last year and net income for the quarter came in at $9.1 billion, up 4% on the same quarter of the previous year.
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JPMorgan Chase earned $9.4 billion of net income on nearly $30 billion of revenue and we maintained our credit reserves at $34 billion given significant economic uncertainty and a broad range of potential outcomes. We further strengthened our capital and liquidity position- 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 3rd quarter 2020 earnings report
Data below refers to the latest quarter's data unless specified otherwise:
- Revenue: $29.147 billion (up from $29.481billion for the same period of the previous year)
- Revenues remained basically unchanged over the last 12 months
- Total non interest expenses: $16.875 billion (up from $16.372 billion for the same period of the previous year)
- Total non interest expenses increased by 3% over the last 12 months
- Some margin squeeze for JP Morgan as their revenues increased a lot more than their non interest expenses
- Net income: $9.443 billion (down from $9.080 billion for the same period of the previous year)
- Net income decreased by 4% over the last 12 months
- Diluted earnings per share: $2.92 (up from $2.68 for the same period of the previous year)
- PE ratio of JP Morgan Chase: 9.2
- Dividend declared: $0.90
- Dividend yield: 3.6%
- Diluted weighted-average shares outstanding: 3.082 billion (down from 3.207 billion for the same period of the previous year)
- Book value per share: $79.08 (up 5% from $75.24 for the same period of the previous year)
- Cash and cash equivalents: $20.816 billion
- Cash and cash equivalents per share: $6.75
- 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: $958.926 billion
- Loans net of allowances for losses 29.5% of JP Morgan Chase's total assets
- Goodwill: $51.594 billion
- Goodwill makes up 1.62% of JP Morgan Chase's total assets
- Goodwill per stock: $16.74
- Stockholders equity in JP Morgan Chase: $271.113 billion
- Stockholders equity per share: $87.96
- 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 3rd quarter 2020 earnings
Jamie Dimon, Chairman and CEO, commented on the financial results: “JPMorgan Chase earned $9.4 billion of net income on nearly $30 billion of revenue and we maintained our credit reserves at $34 billion given significant economic uncertainty and a broad range of potential outcomes. We further strengthened our capital and liquidity position, increasing CET1 capital to $198 billion (13.0% CET1 ratio, up 60 basis points after paying the dividend) and liquidity sources to $1.3 trillion. The Corporate & Investment Bank continues to be a big driver of Firm performance with Markets revenue up 30% and Global IB fees up 9%. CIB and Commercial Banking continue to attract and retain deposits given our strong client franchise as our clients remain liquid. Asset & Wealth Management generated record revenue and net income and saw strong net inflows into long-term products.”
Dimon added: “In Consumer & Community Banking, we continue to add deposits, up 28% versus last year – and based on the most recent FDIC data we ranked #1 in U.S. retail deposits for the first time ever as we are investing in the business to better serve our customers’ needs. The Firm recently received approval to open branches in 10 additional states which would allow us to operate branches in all of the lower 48 U.S. states. Home Lending benefited from strong production margins, and combined debit and credit card spend showed positive year-over-year growth in September for the first time since the widespread shutdowns.”
Dimon added: “In Consumer & Community Banking, we continue to add deposits, up 28% versus last year – and based on the most recent FDIC data we ranked #1 in U.S. retail deposits for the first time ever as we are investing in the business to better serve our customers’ needs. The Firm recently received approval to open branches in 10 additional states which would allow us to operate branches in all of the lower 48 U.S. states. Home Lending benefited from strong production margins, and combined debit and credit card spend showed positive year-over-year growth in September for the first time since the widespread shutdowns.”
Dimon concluded: “I want to thank our employees around the world for their tireless work in helping our clients and communities impacted by the COVID-19 pandemic over the past several months. Despite significant uncertainty in the environment, the Firm is unwavering in its commitment to drive an inclusive economic recovery, advance sustainable solutions to address climate change and improve the lives of our customers, especially those in underserved communities.”
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 $64.30 a stock and its currently trading at $100.78 a stock. That's decent return of 56.7% 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 Citigroup (C) vs BlackRock (BLK) 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 CNBC.com
JPMorgan Chase on Tuesday posted earnings that beat analysts’ estimates for the top and bottom lines. The lender’s shares dipped slightly after rising 1.5% in premarket trading.
The bank posted third-quarter profit of $9.44 billion, or $2.92 per share, exceeding the $2.23 per share consensus estimate of analysts surveyed by Refinitiv. The firm generated revenue of $29.94 billion, about $1.5 billion more than what analysts had expected, fueled in part by better-than-projected trading results.
The key question for the quarter: Whether American banks would show that they’re largely done setting aside money for loan defaults tied to the pandemic. That appears to be the case at JPMorgan, the biggest U.S. bank by assets, which had a $611 million provision for credit costs in the period, compared with $10.5 billion in the previous quarter.
Rather than building loan-loss reserves, as it had done aggressively in the first half of the year, JPMorgan actually reduced them by $569 million in the quarter, citing a runoff in its mortgage portfolio. The bank had added more than $15 billion to loan loss reserves in the first two quarters of 2020.
Read the full article here
JPMorgan Chase on Tuesday posted earnings that beat analysts’ estimates for the top and bottom lines. The lender’s shares dipped slightly after rising 1.5% in premarket trading.
The bank posted third-quarter profit of $9.44 billion, or $2.92 per share, exceeding the $2.23 per share consensus estimate of analysts surveyed by Refinitiv. The firm generated revenue of $29.94 billion, about $1.5 billion more than what analysts had expected, fueled in part by better-than-projected trading results.
The key question for the quarter: Whether American banks would show that they’re largely done setting aside money for loan defaults tied to the pandemic. That appears to be the case at JPMorgan, the biggest U.S. bank by assets, which had a $611 million provision for credit costs in the period, compared with $10.5 billion in the previous quarter.
Rather than building loan-loss reserves, as it had done aggressively in the first half of the year, JPMorgan actually reduced them by $569 million in the quarter, citing a runoff in its mortgage portfolio. The bank had added more than $15 billion to loan loss reserves in the first two quarters of 2020.
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 price (full value price) for JP Morgan Chase stock at $129.10 a stock (up slightly from our 2nd 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 $11.78.
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 $129.10 Therefore we believe a good entry point into JP Morgan Chase's stock is at $116.20 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 $129.10 Therefore we believe a good entry point into JP Morgan Chase's stock is at $116.20 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) 4th quarter 2020 earnings report will be released in the middle of January 2021