Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

After Earnings, JP Morgan Chase and Co. (JPM) could be a Steal at the Current Price

Page 1 of 2

Most analysts agree that financial stocks, and especially banks, will perform well this earnings season. In fact, with the exception of perhaps Bank of America Corp (NYSE:BAC), most of them have fared quite well. Some have been especially good, like Goldman Sachs Group, Inc. (NYSE:GS), which has blown it out of the park ($5.60 EPS versus the analyst consensus of $3.66 EPS). No wonder shares of Goldman have jumped more than 6% after the earnings report.  And, at a P/E of 10.23x, the stock is still far from unattractive.

JPMorgan Chase & Co (NYSE:JPM)There has been, however, another bank that has a good earnings report out, but it has been overlooked by the market: JPMorgan Chase & Co. (NYSE:JPM). On Jan. 21 the American bank reported net income of $5.7 billion (up from $3.7 billion last year), and EPS of $1.39, up from last year’s $0.90, beating the analyst estimates of $1.16 (that’s roughly a 20% beat). The stock, however, barely moved on the days that followed the report, which could signal that the market has overlooked this one.

But is the market wrong? How does JP Morgan’s stock look like?

  • It trades at 8.93x earnings, which is a very low valuation, even for financial stocks. Forward P/E is even lower (at only 8.09x). From a valuation perspective, the stock is very cheap.
  • It currently has an average target price of $51.29. That implies an upside potential of more than 10%.
  • The bank has posted record profits three years in a row.
  • They have successfully returned to safer business areas (such as mortgages and deposits), and yet are still a strong player in investment banking.
  • When compared to its main competitors, JPM has an edge:
Stock P/E Forward P/E Average Price Target Implied Upside from Avg PT Dividend Yield
JP Morgan 8.92 8.09 $51.29 10.51% 2.59%
Bank of America 44.56 8.70 $12 5.72% 0.36%
Goldman Sachs 10.20 9.78 $143.48 -1.24% 1.38%
Wells Fargo 10.40 8.98 $38.91 11% 2.52%

As one can see in the above table, JPM is more attractive than its main competitors in all areas except “Implied Upside from Average Price Target,” where Wells Fargo’s implied upside is very slightly above JP Morgan’s. With the exception of Bank of America’s current P/E, all stocks seem cheap, but JP Morgan is by far the cheapest of the lot.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!