Banking & Finance

What to Expect From JPMorgan Earnings

JPMorgan Chase & Co. (NYSE: JPM) is scheduled to report its second-quarter financial results before the markets open on Tuesday. The consensus estimates from Thomson Reuters call for $1.44 in earnings per share (EPS) on $24.53 billion in revenue. In the same period of the previous year, the big bank posted EPS of $1.46 and revenue of $25.35 billion.

The company beat estimates last quarter, with numbers roughly equal to the consensus estimates for the second quarter. The stock price rose nearly 12% in the second quarter, the best of any of the big banks. The bank is still shrinking somewhat, but first-quarter results were able to overcome the decline by taking advantage of the volatility in the markets caused by macro events. If JPMorgan can control its expenses, it should have another decent quarter. The bank’s forward price-to-earnings (P/E) ratio is 10.22 and the price-to-book ratio is 1.16.

Just recently, Oppenheimer lowered its rating on JPMorgan to Perform from Outperform and removed its price target of $81.

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On a fundamental basis, the brokerage firm expects few surprises in the second quarter. Net interest, fee and trading revenues are estimated to all be relatively flat year over year. Based on the Federal Reserve’s recent commentary, Oppenheimer did push the “bottom” in the net interest margin out from the second quarter to the third quarter, and this leads to modest trims in estimates, but overall Oppenheimer does not think it really matters.

According to Oppenheimer:

Net interest and fee revenues have essentially been flat since mid-2011, and the only core earnings growth has come from a steady decline in credit losses and core operating expenses. We expect 2Q15 to be more of the same. That said, despite the boredom in the fundamentals, the stocks do zig and zag a bit. They have zigged a lot recently, and we’d advise investors to zag toward a bit more caution.

Other analysts have weighed in recently on the mega bank as well:

  • Credit Suisse reiterated an Outperform rating with a $75 price target.
  • Deutsche Bank reiterated a Buy rating.
  • Argus has a Buy rating and increased its price target to $77 from $70.

Shares of JPMorgan were up 1.3% at $67.90 just after the opening bell Monday. The stock has a consensus analyst price target of $71.61 and a 52-week trading range of $54.26 to $69.82.

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