On Jan 16, 2014 shares of JPMorgan Chase & Co. (JPM) hit a new 52-week high of $59.82.
The momentum was driven by solid fourth-quarter 2013 results posted by the company on Jan 14. Shares gained nearly 2.2% since then to close at $58.99 yesterday.
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This banking giant returned to profitability riding on the strength of its legal reserves that helped it to resolve the legal issues related to Global RMBS, Gibbs & Bruns and Madoff without hampering the overall picture.
Moreover, solid performance by its client franchises helped it to weather low interest rate and sluggish loan growth environment.
Excluding non-recurring items, JPMorgan managed to deliver positive earnings surprise in all the four quarters of 2013 with an average beat of 11.1%. With respect to the fourth quarter performance, earnings of $1.30 per share comfortably beat the Zacks Consensus Estimate of $1.25. Adjusting for one-time items, JPMorgan earned $1.40 per share, surpassing the Zacks Consensus Estimate with ease.
JPMorgan witnessed improved transactions and gained market share in Banking and Markets during the last reported quarter. Client investment assets were at impressive levels and growth in Consumer deposits and Credit Card sales volumes continued.
Non-interest expense in the fourth quarter declined 3% year over year due to lower servicing expense.
Reflecting improved delinquency trends, reduction in the allowance for loan losses and lower estimated losses in the mortgage and credit card portfolios, provision for credit losses as well as total consumer provision for credit losses in the quarter dropped from year-ago level.
JPMorgan’s credit quality also improved during the quarter, with non-performing assets’ balance declining 18% year over year.
Valuation for JPMorgan looks attractive. The shares are trading at a 20.2% discount to the peer group average on a forward price-to-earnings basis and at a 2.7% discount on a price-to-book basis. Return on equity, on the other hand, is 13.8% higher than the peer group average. The one-year return from the stock of 27.9% is also higher than the S&P’s return of 25.4%.
JPMorgan presently carries a Zacks Rank #3 (Hold). Some better-ranked major regional banks worth considering include Bank of America Corporation (BAC), BB&T Corporation (BBT) and Fifth Third Bancorp (FITB). All these sport a Zacks Rank #2 (Buy).
BANK OF AMER CP (BAC): Free Stock Analysis Report
BB&T CORP (BBT): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
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