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April 12, 2012 at 17:42 PM EDT
JPMorgan Chase (NYSE: JPM) Earnings: The Best of the Big Banks?
JPMorgan Chase & Co. (NYSE: JPM ) reports earnings tomorrow (Friday) morning, kicking off the bank earnings season that will start to show signs of an industry turnaround. Banks in general are staging a recovery from the height of the financial crisis in which we saw a plethora of bank failures, bank closures and bank mergers. Borrowing has increased and investor trading activity is perking up. But, first quarter revenue is expected to be flat from a year ago because loan books grew at a slower pace and interest rates have remained at historically low levels. This has weighed on improved revenue in other areas. Investors can make a first impression on the banking sector Friday after seeing the earnings report from bellwether JPMorgan - which could outshine its banking counterparts. "We expect JPM to set the bar high for the industry," Keefe, Bruyette Woods analysts told investors in a report. To continue reading, click here...
JPMorgan Earnings Preview

Ahead of JPMorgan's first quarter earnings announcement, analysts have become increasingly bullish, with the consensus moving from $1.10 earnings per share to the current forecast of $1.16, according to Forbes.

Analysts polled by FactSet expect JPMorgan to earn $1.16 a share on revenue of $24.40 billion. That's about 9% lower than the $1.28 the bank earned in the first quarter of 2011.

JPMorgan revenue is expected to decrease about 15% from the same period a year earlier. Profit has fallen in each of the last two quarters, with a 22.8% profit decline last quarter, following a 3.5% slip in the third quarter.

But after a rough fourth quarter, some business aspects of big banking are ready to turnaround.

Investment banking and trading revenue were down significantly at the end of last year, so there's plenty of room for improvement in the first quarter results.

"We forecast the median universal bank to grow revenues by approximately 11%" from the fourth quarter, wrote Keefe, Bruyette Woods analysts.

Bank earnings could also see a boost from the fourth quarter from increased trading and underwriting in bonds, currencies and commodities, leading some to be more bullish on the sector.

Barclays analyst Jason Goldberg wrote in a report for investors he expects banking industry earnings per share to rise 8% from a year earlier, and 2% from the fourth quarter, according to The Wall Street Journal.

Even if JPMorgan sees a revenue decline, the outlook for 2012 is getting brighter.

JPM: Best of the Bunch?

JPM stock has climbed 35% this year.

The majority of analysts rate JPMorgan a "Buy", and have grown increasingly optimistic about the stock in the last three months. JPMorgan's nearest 10 competitors didn't fare as well among analysts rating, averaged just 47.6% buys among the bunch.

JPMorgan also passed the Federal Reserve stress test, a nod from Team Bernanke that it believes the company is strong enough to give back capital to shareholders. And it has done just that.

Earlier in the year it raised its dividend from $.25 a quarter to $.30, and announced a stock repurchase program from the year.

JPM CEO Jamie Dimon is the company's - and the sector's - biggest cheerleader. On Wednesday, Dimon gushed that the U.S. economy is on the mend, adding that businesses are flush with cash after weathering the worst of the financial crisis. They may be battered, but they are not broken.

During a talk at Rice University in Texas, Dimon said, "Corporate America is in great shape. A lot of cash, a lot of capital. The great American business machine is starting to hum."

JPMorgan is headed in the right direction and CEO Jamie Dimon is intent on rewarding shareholders. The risk is still on, but the reward is growing.

JPM closed up 1.89% Thursday at $44.84.

[The degree of uncertainty surrounding financial stocks like JPMorgan Chase & Co. (NYSE: JPM) during earnings season creates an excellent opportunity for investors to try options strategies. Check out this report from our options expert Larry D. Spears: Using Options to Make a Quick Profit on JPMorgan (NYSE:JPM) Earnings.]

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JPMorgan Chase & Co. (NYSE: JPM) reports earnings tomorrow (Friday) morning, kicking off the bank earnings season that will start to show signs of an industry turnaround.

Banks in general are staging a recovery from the height of the financial crisis in which we saw a plethora of bank failures, bank closures and bank mergers. Borrowing has increased and investor trading activity is perking up.

But, first quarter revenue is expected to be flat from a year ago because loan books grew at a slower pace and interest rates have remained at historically low levels. This has weighed on improved revenue in other areas.

Investors can make a first impression on the banking sector Friday after seeing the earnings report from bellwether JPMorgan - which could outshine its banking counterparts.


Tags: JPMorgan Chase (NYSE: JPM), JPMorgan Chase earnings, JPMorgan Chase stock, NYSE: JPM Stock
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