The financial services sector has recovered splendidly from the beat down it suffered during the 2008 financial crisis. It has been one of the best performing sectors in the last year, and sentiment remains high for the industry in 2013.
This article compares the attributes and recent performance of four of the biggest names in the industry: Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), and Goldman Sachs Group, Inc. (NYSE:GS).
Market valuation: Wells Fargo & Co (NYSE:WFC) trades at a price/earnings ratio of 10.6 and a price/book ratio of 1.36. JPMorgan Chase & Co. (NYSE:JPM) is valued at a P/E of 8.6 and a price-to-book of 0.94. Citigroup’s P/E ratio is 16.9, while its price-to-book ratio is 0.75. Goldman Sachs Group, Inc. (NYSE:GS) has a P/E of 9.8 and a price/book of 0.95.
Recent stock performance: Wells Fargo & Co (NYSE:WFC) has traded between $29.80 and $38.20 in the last year, with a current price of $37.40. Shares hit $40 in September 2008 before plummeting to under $10 due to the global financial crisis. It has traded between $25 and $35 since mid-2009.
Other than a plateau during the fall of 2012, JPMorgan Chase & Co. (NYSE:JPM)’s stock has been on a steady rise since hitting a 52-week low of $30.83 in June 2012. It is currently valued at $48 a share. It has regained the value it had prior to the financial crisis, but it has been a volatile stock over the past two years, fluctuating between $30 and $50.
Citigroup Inc (NYSE:C) shares have nearly doubled in value since establishing a 52-week low of $24.61 in June 2012. That’s little solace for shareholders who saw the stock crash from $250 to $10 during the financial crisis. Though not as steep, the stock also suffered a 50% decline from January to October 2011.
Goldman Sachs Group, Inc. (NYSE:GS) has rewarded investors in the last year, as shares have risen 30% since May 2012 to about $144. Shares are still well under the $200 they were fetching before the financial crisis.
Recent earnings report: JPMorgan Chase & Co. (NYSE:JPM) has produced increasing net income each of the last four years, from $11.73 billion in 2009 to $21.28 billion last year. Though not as robust, Wells Fargo & Co (NYSE:WFC) has also increased its net income year over year for a few years, from $12.28 billion in 2009 to almost $19 billion last year.
Goldman Sachs Group, Inc. (NYSE:GS) encountered two consecutive years of falling net income, from $13.3 billion in 2009 to $4.4 billion in 2011, but produced an increase to $7.5 billion in 2012. Citigroup Inc (NYSE:C) suffered a $1.6 billion loss in 2009, then rebounded with 2010 net income of $10.6 billion and $11 billion in 2011. Last year, net income fell to $7.5 billion.
Analyst opinion: Wells Fargo & Co (NYSE:WFC)’s analysts have given the company 7 strong buy ratings, 11 buys, 16 holds and 1 sell. Citigroup Inc (NYSE:C)’s analysts have given it 9 strong buys, 17 buys, 3 holds and 1 each of underperform and sell. JPMorgan Chase & Co. (NYSE:JPM) has 8 strong buy ratings, 20 buys, 4 holds and an underperform. Goldman Sachs analysts are more neutral than the other companies, with 4 strong buys, 4 buys, 19 holds and 2 underperforms.
Management effectiveness: Wells Fargo & Co (NYSE:WFC)’s 12-month return on equity was 13.4%, return on assets was 1.4%, return on investments was 6.8% and its most recent annual net profit margin was 27.1%. Its average returns over the last five years were 0.3% on assets and 1.5% on investments with an average NPM of 5.2%.
JPMorgan Chase & Co. (NYSE:JPM) garnered a return on its equity of 10.9%, on its assets of 0.9% and its investments of 4.7%. Its net profit margin last year 26%. Over the last five years, it has averaged a net profit margin of 9.8%, a return on assets of 0.5% and a return on investments of 2.3%.
Citigroup Inc (NYSE:C)’s return on equity in its last full year was 4.2%, while its return on assets was 0.4% and its return on investments was 1.80%. It earned a net profit margin of 9.1%. Over the last five years, Citigroup has averaged a net profit margin of 0.1%. with 0 averages on its ROA and ROI.