Banking, finance, and taxes

What to Expect From JPMorgan Earnings

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JPMorgan Chase & Co. (NYSE: JPM) is scheduled to report its third-quarter financial results before the markets open on Thursday. The consensus estimates from Thomson Reuters call for $1.27 in earnings per share (EPS) on $22.94 billion in revenue. In the same period of the previous year, the financial giant posted EPS of $1.19 and $23.55 billion in revenue.

This stock trades at a very low 9.58 times estimated 2016 forward earnings. JPMorgan is expected to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings and a very solid price-to-book value. Some analysts have cautioned that last year’s divestiture of the physical commodities business could provide an earnings headwind throughout this year.

Improvement in loan growth, solid but volatile equity capital markets, and a steady increase in deposits will be a solid plus. Trading at a discount to many of the large cap banks on 2015 and 2016 earnings estimates helps upside potential as well. With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors.

Goldman Sachs has target price of $69 on JPMorgan shares, which still indicates $10 upside, and the 2.7% yield would imply a total return expectation of almost 20% if you include the dividend.

A few other analysts weighed in on JPMorgan ahead of its earnings report:

  • Nomura has a Buy rating but lowered its price to $70 from $72.
  • Evercore ISI has a Buy rating.
  • Deutsch Bank reiterated a Buy rating.
  • Robert W. Baird reiterated a Buy rating.

So far in 2016, JPMorgan is one of the worst performing Dow stocks, with shares down about 10%.

Shares of JPMorgan were last trading at $58.89, with a consensus analyst price target of $72.78 and a 52-week trading range of $50.07 to $70.61.

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