What will investors look for in 2015 now that the bull market is almost six years old? Stocks have risen exponentially from the bottom in March of 2009. In 2014, the Dow Jones Industrial Average rose 7.5% and the S&P 500 Index rose 11.4%. While those index gains do not account for individual stock dividends, JPMorgan Chase & Co. (NYSE: JPM) closed out 2014 at $62.58, for a gain of 9.9%, including its dividend adjustments.
24/7 Wall St. has undertaken a bullish and bearish case to evaluate both sides of the coin and see what lies ahead for Jamie Dimon and his team in 2015 and beyond. Afterward, we include valuation analysis for the likes of Bank of America Corp. (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and Citigroup Inc. (NYSE: C).
One key consideration for the year ahead is that the money center banking giant is getting ever further past its trading losses and charge-off scandals. Also, Jamie Dimon is now believed to be healthy and cancer-free.
J.P. Morgan had a 2014 trading range of $52.97 to $63.49, and the consensus analyst price target of $67.90 would imply upside of 8.5% this year. Then there is the dividend yield of 2.6% to consider, which would make for an implied total return of close to 11% if the analysts are correct.
Note that in our same DJIA component bullish and bearish analysis a year ago, the pool of analysts called for a gain of roughly 8.4% for 2014. It returned 9.9% instead. It is good that it outperformed consensus expectations, but the return is much closer to what was expected than we saw in most other DJIA stocks relative to their bullish and bearish outlooks from a year ago.
J.P. Morgan has a market cap near $234 billion, and its fortress balance sheet has had assets of over $2.5 trillion for two quarters in a row, without knowing what the year-end balance sheet looks like at the time this was published.
J.P. Morgan is not necessarily cheap compared to all banks at 11.5 times current earnings, but the earnings multiple of 10 times expected 2015 earnings per share puts it at a handy discount to the broader stock market. That being said, banks are supposed to trade cheaper than the market.
The big question when it comes to valuations is that J.P. Morgan’s revenues have grown very slowly. The delay of certain parts of the Volcker Rule is just not likely going to be enough to offset the former trading revenues.
Since the woes of the London Whale scandal, Jamie Dimon lost his mouthpiece. Calling it a “tempest in a teapot” was a mistake. Now Dimon is getting the ability to become vocal again, but it seems that he wants to avoid being as much of an industry spokesperson. After all, who wants to make themselves the number-one target.