Full Earnings Previews for J.P. Morgan and Wells Fargo

Banking, finance, and taxes

Published: April 10, 2014 12:30 pm

Friday morning is likely to set the tone of earnings season as far as the big banks are concerned. The two largest banks are reporting earnings: J.P. Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC).

J.P. Morgan Chase & Co. (NYSE: JPM) has a 1.10-to-1 price-to-book ratio. Its market cap is $222.60 billion and its forward price-to-earnings (P/E) ratio is 9.5. With a Thomson Reuters consensus target price of $66.40, J.P. Morgan has an implied upside of 14% — plus that 2.7% dividend yield. J.P. Morgan shares closed Wednesday at $59.27 and were down at $58.30 in mid-Thursday trading ahead of earnings. The bank with the so-called fortress balance sheet has a 52-week trading range of $46.05 to $61.48.

Earnings estimates from Thomson Reuters are $1.40 earnings per share (EPS) and $24.53 billion in revenue. That would be down from $1.59 EPS a year ago with a drop in revenue of close to 5%. J.P. Morgan does not offer guidance on earnings.

Wells Fargo & Co. (NYSE: WFC) is more expensive with a 1.66-to-1 price-to-book value ratio, a big premium among almost all big banks. As a reminder, this is Warren Buffett’s biggest holding and it is among his top dividend stocks for investors. Wells Fargo’s market cap is $258.36 billion, and its forward P/E ratio is up at 11.5. Its consensus target price of $50.86 implies an upside of just over 5% — and that includes a 1.6% mid-Thursday drop to $48.30. Wells Fargo’s dividend yield is still 2.5% but is about to be larger. Wells Fargo’s 52-week trading range is $36.19 to $50.49.

Consensus earnings estimates are $0.97 EPS and $20.6 billion in revenue, which would be compared to $0.92 per share and $21.26 billion in revenue a year ago. Just like J.P. Morgan and other major banks, Wells Fargo does not offer earnings guidance.

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