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JPMorgan Chase & Co. (JPM, Financial), the American global financial services company, will release its financial results for the second quarter of fiscal 2017 before the stock market opens on July 17.
Analysts forecast the bank will close the quarter reporting EPS of $1.59 on average. The average EPS is the mean of 25 analysts surveyed. Estimates range between a low of $1.5 and a high of $1.69. The average estimate of $1.59 represents a four-cent or nearly 2.6% increase from the comparable quarter of 2016.
Source: Yahoo Finance
The average revenue estimate for the quarter is $25.02 billion. This forecasted figure represents a 0.8% decline from the comparable quarter of 2016 and is the mean of 20 estimates of surveyed analysts. The estimates range between a low of $24.13 billion and a high of $26.18 billion.
Source: Yahoo Finance
JPMorgan closed fiscal 2016 with $2,546.29 billion in total assets, of which $650.961 billion is cash on hand and securities and $1,659.233 billion is long-term investments. Total liabilities amounted to $2,290.427 billion.
GuruFocus gives JPMorgan a financial strength rating of 6 out of 10 and a profitability and growth rating of 5 out of 10.
When examining the profitability of a financial services company, I like to look at three ratios: the net profit margin, the loan-to-assets ratio and the return on assets ratio.
The net profit margin, which measures a company's overall profitability, tells us JPMorgan is currently slightly below the industry and the sector. The bank has a net profit margin of 26.43%, while the industry’s average ratio is 27.56% and the sector’s average ratio is 27.19%.
The loan-to-assets ratio, which indicates how the bank derives its income, of 0.35 suggests JPMorgan relies more on asset management and trading activities to generate income. In contrast, Wells Fargo & Co. (WFC, Financial) and Bank of America Corp. (BAC, Financial) depend on loans and investments to produce income.
The return on assets ratio, which measures how profitable a company’s loan activity is, is 1.03%. Compared to the industry’s average ratio of 2.36% and the sector’s average ratio of 2.51%, JPMorgan makes less money than its peers when giving loans.
JPMorgan is currently trading around $92.51 per share on the New York Stock Exchange with a market capitalization of $328.63 billion, a price-earnings (P/E) ratio of 14.24, a price-book (P/B) ratio of 1.43 and a price-sales (P/S) ratio of 3.56.
Multiplying the forward P/E ratio of 12.14 by the average full-year 2017 EPS estimate of $6.63 yields a value of $80.49.
The analysts’ average target price is $94.88. The prices ranged between a low of $80 and a high of $106 per share. The recommendation rating is 2.4 out of 5.
JPMorgan distributes an annual dividend of $2 through quarterly payments of 50 cents, for a dividend yield of 2.15% based on the latest closing share price.
Disclosure: I have no positions in any stock mentioned in this article.
