JPMorgan Chase and Bank of America Have Strong Start to Earnings Season

JPMorgan Chase and Co. (Ticker Symbol: JPM) reported earnings and revenue that beat the street’s expectations. The American multinational investment bank and financial services company reported an earnings per share beat of $2.68 vs. Wall Street analysts’ estimates of $2.45 per share.  Additionally, JPMorgan reported a revenue beat of $30.1 billion vs. Wall Street analysts’ expectations of $28.5 billion.

The bank reported fixed income revenue of $3.56 billion vs. Wall Street analyst estimates of $3.2 billion. Equities trading came in slightly weaker than expected at $1.52 billion vs. Wall Street’s expectations of $1.58 billion.  The bank stated that the results were helped by its strength in its consumer banking operations, primarily in home and car loans and credit cards, which helped the bank offset lower interest rates.

The Bank of America Corporation (Ticker Symbol: BAC) also reported earnings and revenue that were better than the street expected. The American multinational investment bank and financial services company reported an earnings per share beat of .56 cents vs. Wall Street analysts’ expectations of .51 cents per share.  The Charlotte, North Carolina-based bank reported a revenue beat of $23 billion, which beat Wall Street’s estimates of $22.79 billion.

The above image is a chart of the Financial Select Sector SPDR exchange traded fund (ETF), which trades under the ticker symbol XLF, of which Bank of America and JPMorgan are in its top three holdings.  The ETF spent the second half of 2015 and the majority of 2016 trading in a symmetrical  triangle pattern.  XLF broke out from that pattern in the fourth quarter of 2016 and proceeded to rally over 50% over the course of the next year and a half.  The ETF found some resistance just above the $30.00 price level and unfortunately for shareholders, it took a turn for the worse and began to sell off until the first quarter of 2019 in which it found some price support just below its 200-week moving average.  XLF is positive for the year and trading just above its 100-week moving average.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of 10 analysts offering 12-month price targets, the average price target for JPMorgan’s stock is $122.60. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $120.25.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of seven analysts offering 12-month price targets, the average price target for Bank of America’s stock is $34.20. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $30.38.

Earlier this year, JPMorgan increased its dividend by .10 cents to .90 cents a share. The bank also announced an increase to its stock buyback program by $9 billion, raising its total amount of stock repurchases to $29.4 billion. Additionally, Bank of America increased its dividend by .03 cents to .18 cents a share. The bank also announced an increase to its stock buyback program, raising its total amount of repurchases to $30.9 billion.

Investors in the financial sector should look to JPMorgan’s next earnings release on Jan. 14th or Bank of America’s earnings release on Jan. 15th for fresh news within the sector.

 


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