JPMorgan Chase & Co. (NYSE:JPM) boasts of being one of the largest banking firms in the U.S. It is a leading global financial services institution with operations networked worldwide. The firm has perfected the science of investment banking, commercial banking, financial services for consumers and small businesses, asset management and private equity, and financial transaction processing.
It has split its global financial services into four broad segments: Consumer & Community Banking, Corporate & Investment Banking, Commercial Banking, and Asset Management. The Consumer & Community Banking division offers deposit and investment products to consumers, lending, deposit and cash management solutions to small businesses, residential mortgages, credit cards, auto, and student loans.
According to BusinessWire, JPMorgan’s total assets amount to a colossal $2.5 trillion and is backed by $219.7 billion in stockholders’ equity.
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- JPM 15-Year Financial Data
- The intrinsic value of JPM
- Peter Lynch Chart of JPM
All Those in Favor Say Aye!
On May 20, JPMorgan Chase & Co. declared a quarterly dividend of 40 cents per share on all outstanding common stock. The dividend will be paid on July 31, 2014, applicable to shareholders on record since close of business day July 3, 2014.
On May 28, TheStreet favored JPMorgan stock with a "buy" status and a B+ rating. The Ratings team solidly backed up their recommendation by specifically stating two strengths which will override any weaknesses the organization possesses. JPMorgan is confidently enlarging its profit margins, and its stock owners realized an appreciation in stock price during the year 2013, whereas the firm witnessed subpar growth in net income, considered as a major weakness.
TheStreet Ratings team provides the key points of its analysis, often comparing first quarter results of 2013 and 2014:
- Current gross profit margin is recorded high, amounting to 88.15%. The net profit margin amounted to 20.99%, grazing the industry average comfortably.
- In the first quarter 2014, EPS recorded a downfall of 19.5% in comparison to 2013 first quarter. Over the past year, the firm has steadily depreciated in its earnings per share. However, TheStreet favorably forecasts the trend to reverse over the next year. JP Morgan, during the fiscal year 2012-2013, reported lower earnings of $4.32 versus $5.19 in fiscal year 2011-2012. The market projects EPS for this year at $5.43 versus $4.32.
- With its decline in revenue, the company slightly underperformed the industry average of 0.4%. Comparing first quarter results of the past two years, revenues slightly dipped by 9.0%. The consequences of the slight revenue decline were acutely felt by the company’s bottom line, EPS and added to its downward trend in EPS since last year.
- In comparison of first quarter results between 2013 and 2014, net operating cash flow evidenced a downward dash to $14,667 million or 26.53%. The company disappointed the industry average by generating marginally lower net operation cash flows.
For JPMorgan, the forecast looks brighter with partly cloudy, sunny days. JP Morgan Chase is a strong, financially backed firm which will be not be deterred in its path of global success by slight market developments, these being the very nature of market dynamics.
Lend a Helping Hand
Last July, the State of Detroit filed the biggest municipal bankruptcy in the history of the United States. The state has filed a colossal $18 billion debt. Detroit has asked for help in raising capital from prosperous philanthropic institutions and the state’s three automaker companies.
Reuters reported that JP Morgan Chase & Co. announced on May 21 a mega $100 million, five-year philanthropic commitment in order to jump-start Detroit’s economic recovery. The bank deliberated over the five-year plan with community and government leaders.
Out of the $100 million, JPMorgan intends to invest $50 million to finance capital projects in neighborhoods and small businesses, $25 million to uplift residential property, $12.5 million for job training, an additional $7 million to support small businesses, and $5.5 million financial backing for strategic initiatives (such as light rail system). The bank has further planned to send employee volunteers to lend business expertise to the state’s nonprofit groups.
It has already been established that JPM holds a "buy" position for the immediate future. Why are investors interested in JPM, other than the financial gains of course? The bank is a worldwide leader in multifaceted financial services and has not flinched from ups and downs of the market dynamics.
In fact, right after its first quarter downward trends in EPS and net income, it has not hesitated to further its philanthropic mission. There was no obligation on the corporation to provide a lending hand to the rapidly deteriorating financial position of Detroit. Instead, the corporation boldly announced a $100 million five-year investment for the state. Further, a day earlier on May 20, the company announced a quarterly dividend for its common stockholders. Is it any wonder then that the stock appreciated in value on May 21 to 0.95% or 0.51 points safely landing at a $54.23 share price?