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JPMorgan Chase Is Strong despite Weak Fourth Quarter

Amit Singh - Author

Aug. 18 2020, Updated 6:14 a.m. ET

JPMorgan Chase

JPMorgan Chase’s (JPM) fourth-quarter results weren’t that impressive. The bank missed analysts’ estimates. The company broke its strong history of beating analysts’ estimates. Increased volatility and lower market levels had a negative impact on JPMorgan Chase’s performance during the fourth quarter. Despite the fourth-quarter miss, investors and analysts have a favorable outlook on JPMorgan Chase stock.

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JPMorgan Chase is expected to generate healthy revenue growth in 2019 due to the higher net interest income, loans, and deposits. An anticipated increase in the advisory fee is expected to support the top-line growth. However, persisting challenges in the trading-related net interest income could continue to hurt the company.

Higher revenues and share repurchases are expected to drive JPMorgan Chase’s earnings in 2019. However, investments in technology and marketing could remain a drag.

Analysts’ projections

Analysts expect JPMorgan Chase to post revenue growth of 3.0% in 2019. The company’s bottom line is expected to remain strong and increase 9.8% on a YoY basis. The projected growth rate looks impressive as the bank faces tough comps in 2019. In 2018, JPMorgan Chase’s revenues benefited from rate hikes. The lower effective tax rate drove the double-digit EPS growth rate.

JPMorgan Chase stock trades at a forward PE ratio of 10.5x, which seems low based on the expected EPS growth of 9.8% in 2019 and the dividend yield of 3.1%.

Among the 30 analysts covering JPMorgan Chase, 15 recommended a “buy,” 14 recommended a “hold,” and one recommended a “sell.” Analysts have a target price of $115.02 per share on JPMorgan Chase, which implies an upside of 10% based on its closing price on January 18.


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