JP Morgan ($JPM) is both Good Company & Price no ?
My 3rd post to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
To that I have asked, "why not both" ?
Wouldn't that have more upside comparatively speaking ?
Let's take a look at $JPMorgan Chase(JPM)$ , its Q4 2022 earnings and see if it fits the bill.
Sidetrack : I have covered 3 other bank stocks to test out this theory.
- $Jefferies Financial Group Inc.(JEF)$. Click here if interested. Pls "Like" it ok. Tks
- $Wells Fargo(WFC)$. Click here if interested. Pls "Like" it ok. Tks.
- $Bank of America(BAC)$. Click here if interested. Pls "Like" it ok. Tks.
With further ado, let's jump in shall we.
- An American multinational financial services company
- With roots tracing back to 1799.
- By Market capitalization, it is the largest bank in (a) US and (b) the World.
- It is the largest of the Big 4 US banks.
- It is considered systemically importantby the Financial Stability Board (FSB).
- With offices in 60 countries and more than 240,000 employees worldwide.
- Its core financial services are in (a) investment banking, (b) financial services for consumers & small business, (c) commercial banking, (d) financial transactions processing and (e) asset management.
- It grew into its size thru years of strategic mergers and acquisitions (M&A); with the most significant being the merger of JP Morgan and Chase Manhattan in Y2K (year 2000).
In 2022, a year where US market has been hammered by extremely volatility - how did JP Morgan perform ?
Current stock price < 18 Jan stk price by -5.46% only. Resilient
JP Morgan - Q4 2022 earnings
- Total revenue came in at $34.50 Billion vs Wall st expectation of $34.30 according to Refinitiv
- Compared to Q3 2022, revenue is +5.6%. Compared to Q4 2021, revenue is +18% (QoQ)
- Net income came in at $11 Billion vs $9.74 Billion (Q3 2022) vs $10.40 Billion (Q4 2021).
- Earning per share (EPS) tops at $3.57 per share vs Wall st expectation of $3.07 according to Refinitiv.
- Compared to Q3 2022, EPS is +14.42%. Compared to Q4 2021, EPS is +7.21%.
Revenue breakdown by Segment / Dept
- Above is a more detailed breakdown of JP Morgan's revenue source from the different business segment / line / dept
- Investment banking (IB) business fared badly; slipping into the red at -27%. This was slightly "better" than Q3 2022's effort of $3.5 Billion that was -37% (QoQ).
- JP Morgan's mis-investment into Fintech solution Frank ($175 Million) would've come under Corporate & Investment Bank segment.
- Interestingly, Bank of America's investment segment contribution was "Flat" while Wells Fargo Corp's investment segment saw a +18% contribution to bottomline.
JP Morgan - other details
- JP Morgan has in Q4 2022, increased provision for bad debt to $2.28 Billion vs $1.53 Billion (Q3 2022)
- This worked out to be approx a +49% increase; exceeding the $1.96 Billion.. estimated by Street Account.
- Provision was driven by a “modest deterioration in JP Morgan’s US macroeconomic outlook thats reflecting a mild recession as well as loan growth from customers using their Chase credit cards, .... said the bank.
JP Morgan's CEO on Q4 2022 Results :
In the US, consumers continue to spend with solid balance sheets, job openings are plentiful and businesses remain health. However, there are significant headwinds immediately in front of us - stubbornly high inflation leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine which is increasing all geopolitical risks and the fragile state of Oil supply and prices...... Jamie Dimon, CEO, JP Morgan
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Why JP Morgan is Both A Good Price and Good Company ?
- Banking stocks are non-cyclical in nature unlike semiconductors, construction, retail etc..
- With interest rates forecasted to continue rising to the 5% terminal rate banding means more revenue "potentially" to be earned by US financial institutions
- With a generous annual dividend of $4.00 per share (2.80% to current stock price), what is there not to like. $Meta Platforms, Inc.(META)$ - No dividends. $Tesla Motors(TSLA)$ -No dividends.
- Comparing its current stock price and 18 Jan 2022 stock price, there is a mild potential upside of +5.46%
- Do you like what you see about JP Morgan and its Q4 2022 earnings ?
- Do you think you will take a stake in US #1 bank when the price is right ?
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