JPMorgan Chase & Co. (NYSE: JPM) earnings for Q4 are due out today before the bell, and analysts are projecting earnings per share (EPS) of $1.35. Revenue estimates target $23.7 billion for the financial institution, a sales growth of -2.8%.
Because of mounting legal woes, JPM missed Q3 earnings estimates by more than 114% when it reported -$0.17 on estimates of $1.18. Prior to that, JPM had beaten earnings estimates for six straight quarters.
JPMorgan Chase NYSE: JPM Jan 13 loading chart... Price: 57.70 | Ch: -0.79 (-1.4%)Bad news for JPM: Negative headlines regarding JPMorgan Chase's legal issues haven't exactly subsided...
In November, JPMorgan paid $13 billion in a settlement with the U.S. government for continually overstating the quality of mortgages it was selling to investors. Authorities claimed behavior like JPM's was a major factor in the housing bubble, which helped lead to the financial crisis.
Just last week JPM was penalized $2 billion for violating the Bank Secrecy Act, when the bank did not notify authorities in regard to the Bernie Madoff Ponzi scheme. JPMorgan was Madoff's primary bank for more than 20 years, and according to prosecutors in the case, "the Madoff Ponzi scheme was conducted almost exclusively" through JPM accounts.
In the past 12 months, JPM has paid approximately $20 billion in settlement fines.
JPMorgan Chase (NYSE: JPM) Stock After EarningsInvestors should watch to see how JPMorgan's recent penalties and settlements affect earnings - although there's a good chance JPM's money-making ability will exceed its penalties.
"So what that they've paid about $20 billion in settlement fines in the last 12 months? They're still in business," Money Morning Event Trading Specialist Shah Gilani wrote earlier this month. "They're in the business of making insane amounts of money to pay insane fines for insane criminal activity. I'll say it again... JPMorgan Chase is a criminal enterprise."
If there is a hit to profit, investors should expect a sell-off in the short term.
But that shouldn't keep the banking stock down long.
"[JPMorgan] is the cheapest big bank by any metric. It has a single-digit forward-earnings multiple, and it trades at 1.5 times tangible book value," Robert Ewing, Co-Head of U.S. Equities at Putnam Fund for Growth and Income, told Barron's. "JPMorgan still has several things to resolve, but there is a high probability that the big negatives have peaked and will slowly get better from here."
Even amid the slew of unsettling news, JPM stock has gained 10.3% in the last three months, and more than 25% in the last year. JPM stock closed Monday at $57.70, down 1.35% for the day.
Whether the stock dips tomorrow following earnings or not, the Jamie Dimon-led JPMorgan should continue to bring shareholders gains in 2014.
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Tags: big banks, Big Banks 2014, earnings 2014, earnings report, JPM, JPM Earnings, JPM earnings preview, JPM Law suit, JPM stock, JPMorgan 2014, JPMorgan earnings, JPMorgan earnings preview, JPMorgan Law suit, JPMorgan stock, NYSE: JPMThe post JPMorgan (NYSE: JPM) Earnings Preview: Stock Falls Ahead of Report appeared first on Money Morning - Only the News You Can Profit From.
