Is JPMorgan Stock a Buy Post Q4 Earnings & Under Trump 2.0 Policies?
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The largest American lender, JPMorgan JPM, announced fourth-quarter and full-year 2024 results on Jan. 15, before the opening bell. The company’s quarterly top and bottom-line numbers easily outpaced the Zacks Consensus Estimate.Robust capital markets and mortgage banking performance aided JPM’s quarterly performance. On the other hand, a decline in net interest income (NII) and higher adjusted non-interest expenses were the headwinds.Since the results were announced, shares of JPMorgan have gained 5% and even touched a new 52-week high of $260.62 on Friday.A Sneak Peek Into JPM’s Q4 PerformanceInvestment Banking (IB) Fees: In the fourth quarter, industry-wide IB business witnessed a solid trend reversal, and JPMorgan performed extremely well, continuing to lead on the global IB fees front. The company ranked #1 with a wallet share of 9.3% last year. The company’s total IB fees (in its Commercial & Investment Banking or CIB division) soared 49% from the prior-year quarter to $2.48 billion. Specifically, equity underwriting fees grew 54% and debt underwriting fees were up 56%. Further, advisory fees surged 41%. Management is optimistic about the performance of the IB business going forward. Markets Revenues: As trading volume and market volatility rose during the fourth quarter, JPMorgan benefited from it. The company’s markets soared 21% to $7 billion. Specifically, fixed-income markets revenues jumped 50% to $5 billion, while equity trading numbers surged 22% to $2 billion. A similar trend was witnessed by JPM’s close peers – Bank of America BAC and Citigroup C. Though the trading business will likely normalize over time, JPMorgan is expected to keep performing well, given its scale and size and the current ambiguity related to the impact of potential new administrative policy decisions. Driven by this, the company expects Markets to add approximately $4 billion to firm-wide NII this year compared with just $1 billion generated in 2024.Net Interest Income (NII): Because of the 100-basis point interest rate cut by the Federal Reserve since September, JPM’s fourth-quarter NII declined 3% to $23.35 billion. Apart from lower rates, a fall in deposit balances and deposit margin compression were the reasons behind the decrease in NII. Management expects NII to trough by mid-2025 and rise thereafter. For 2025, NII (excluding Markets) is projected to be $90 billion, down 2.2% from $92 billion in 2024.2025 NII (ex-Markets) Outlook Image Source: JPMorgan Chase & Co.Asset Quality: As the relatively high interest rates put pressure on consumer spending and macroeconomic factors weigh on borrowers, JPMorgan reported a significant surge in net charge-offs (NCOs) and non-performing assets (NPAs) during the fourth quarter. NCOs grew 9% to $2.36 billion year-over-year and NPAs were $9.29 billion, jumping 22%. On the other hand, the provision for credit losses fell 5% to $2.63 billion. The company remains vigilant about the effects of continuous high rates and quantitative tightening on its loan portfolio.Impact of Trump Administration’s Policy Decisions on JPMYesterday, Donald Trump was sworn in as the 47th President of the United States. Since winning the elections in early November 2024, Trump has been vocal about several issues, including tariffs on Mexico and Canada, tax cuts, deregulations and his ‘America First’ vision. The potential changes in the administrative policies under Trump 2.0 will likely have a direct and indirect impact on JPMorgan’s businesses.After swearing in, Trump signed many executive orders, including declaring a national energy emergency. While no actions were announced on his biggest economic initiative – tariffs – it was clear that those are coming as soon as Feb. 1. These matters are not expected to have a direct influence on JPMorgan’s businesses but could lead to inflation and prevent the Fed from becoming more dovish. As such, the company’s NII is likely to benefit from higher rates for longer. Additionally, the financial services sector is expected to gain from Trump's support for deregulation. Banks are set to benefit from looser regulations related to service fee charges and lower capital constrain. Further, Trump 2.0 is likely to be friendlier toward corporate mergers as the easing of some rules for big banks and more leniency in approving merger deals are expected. This will likely lead to a strong IB performance for banks, including JPMorgan.Opportunistic Acquisitions & JPM’s Other Expansion EffortsJPMorgan has been growing through on-bolt acquisitions, both domestic and global. In 2023, the company increased its stake in Brazil's C6 Bank to 46% from 40%, allied with Cleareye.ai (a financial technology firm focused on trade finance) and acquired Aumni. Also, the company acquired the failed First Republic Bank in 2023. The deal continues to benefit JPM’s financials immensely and even helped it reach record profits last year. Additionally, in 2022, it acquired Renovite and a 49% stake in Greece-based Viva Wallet and Global Shares. These deals, along with several others, are expected to support the bank's plan to diversify revenues and expand the fee income product suite and consumer bank digitally.In February 2024, JPM announced plans to open more than 500 branches and renovate roughly 1,700 locations by 2027-end. As of Dec. 31, 2024, it had more than 4,950 branches across all 48 states in the United States. JPMorgan actively seeks to expand its digital retail bank – Chase – across the European Union countries after launching it in the U.K. in 2021. The company is focused on bolstering its IB and asset management businesses in China.JPMorgan’s Fortress Balance Sheet and Solid LiquidityAs of Dec. 31, 2024, JPM had a total debt worth $750.1 billion. The company's cash and due from banks and deposits with banks were $469.3 billion on the same date. The company maintains long-term issuer ratings A-/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively.Hence, JPM continues to reward shareholders handsomely. After clearing the 2024 stress test, the company increased its quarterly dividend by 8.7% to $1.25 per share in September. In February 2024, the company announced a 9.5% hike in quarterly dividends, which followed a 5% increase in 2023. In the last five years, it hiked dividends four times, with an annualized growth rate of 6.03%. Currently, the company's payout ratio is 27% of earnings.The company also authorized a new share repurchase program of $30 billion, effective July 1, 2024. As of Dec. 31, 2024, almost $19 billion in authorization remained available.Elevated Mortgage Rates to Hurt JPM’s Mortgage BusinessAs mortgage rates remained high in 2022 and 2023, JPMorgan’s mortgage fees and related income performance turned dismal. With the demand for mortgage loans and refinancing steadily declining, the metric recorded a negative CAGR of 13.6% over the three years ended 2024. Though the trend reversed in 2024, origination volumes and refinancing activities are less likely to witness solid improvement as mortgage rates are expected to remain on the higher side. Per the December 2024 commentary from the Fannie Mae Economic and Strategic Research Group, the mortgage rates are expected to remain well above 6% mark in 2025 on lower “market expectations for future interest rate cuts.” Higher mortgage rates will undeniably take a toll on origination and refinancing volumes. Hence, JPMorgan’s mortgage fees and related income are less likely to record solid growth in the near term.What Should Investors Do With JPM Stock Now?Earnings estimates for JPMorgan for 2025 and 2026 have been revised upward over the past seven. The positive estimate revision depicts bullish sentiments for the stock.Earnings Estimates Trend Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for JPM’s 2025 earnings implies a 10.6% fall year over year because of weakness in NII and mortgage banking business and higher non-interest expenses. Management anticipates non-interest expenses to be almost $95 billion this year, up from $91.1 billion in 2024.Meanwhile, 2026 earnings indicate 6.2% growth. Earnings Estimates Image Source: Zacks Investment ResearchFind the latest earnings estimates and surprises on Zacks Earnings Calendar.In 2024, shares of JPMorgan outperformed not only the S&P 500 Index but also its peers – BAC and C.2024 Price Performance Image Source: Zacks Investment ResearchGiven an impressive rally in JPM shares, it appears slightly expensive relative to the industry. The stock is currently trading at the forward 12-month price/earnings (P/E) of 14.63X. This is above the industry’s 14.33X, reflecting a stretched valuation.Price-to-Earnings F12M Image Source: Zacks Investment ResearchFurther, investors must take into account the bearish analyst stance on JPM for this year. They must watch the NII trajectory and how future interest rate cuts impact the company’s financials. Nonetheless, JPMorgan’s leadership position in several businesses and strategic plan to expand its footprint globally gives it an edge over its peers. Its focus on building a solid deposit franchise and bolstering its loan book positions it well for future growth. Hence, investors should consider parking their cash in JPMorgan at its current price levels for solid long-term returns despite premium valuation. JPM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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Nachrichten zu JPMorgan Chase & Co.
Analysen zu JPMorgan Chase & Co.
Datum | Rating | Analyst | |
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16.01.2025 | JPMorgan ChaseCo Outperform | RBC Capital Markets | |
16.01.2025 | JPMorgan ChaseCo Halten | DZ BANK | |
16.01.2025 | JPMorgan ChaseCo Buy | UBS AG | |
15.01.2025 | JPMorgan ChaseCo Outperform | RBC Capital Markets | |
02.12.2024 | JPMorgan ChaseCo Hold | Deutsche Bank AG |
Datum | Rating | Analyst | |
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16.01.2025 | JPMorgan ChaseCo Outperform | RBC Capital Markets | |
16.01.2025 | JPMorgan ChaseCo Buy | UBS AG | |
15.01.2025 | JPMorgan ChaseCo Outperform | RBC Capital Markets | |
14.10.2024 | JPMorgan ChaseCo Buy | UBS AG | |
05.09.2024 | JPMorgan ChaseCo Buy | Jefferies & Company Inc. |
Datum | Rating | Analyst | |
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16.01.2025 | JPMorgan ChaseCo Halten | DZ BANK | |
02.12.2024 | JPMorgan ChaseCo Hold | Deutsche Bank AG | |
17.09.2024 | JPMorgan ChaseCo Halten | DZ BANK | |
04.09.2024 | JPMorgan ChaseCo Hold | Deutsche Bank AG | |
12.09.2022 | JPMorgan ChaseCo Hold | Jefferies & Company Inc. |
Datum | Rating | Analyst | |
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19.04.2022 | JPMorgan ChaseCo Sell | Joh. Berenberg, Gossler & Co. KG (Berenberg Bank) | |
18.10.2021 | JPMorgan ChaseCo Sell | Joh. Berenberg, Gossler & Co. KG (Berenberg Bank) | |
03.08.2017 | JPMorgan ChaseCo Sell | Joh. Berenberg, Gossler & Co. KG (Berenberg Bank) | |
21.12.2012 | JPMorgan ChaseCo verkaufen | JMP Securities LLC | |
21.09.2007 | Bear Stearns sell | Punk, Ziegel & Co |
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