On Aug 29, 2013, we reaffirmed our long-term recommendation on
JPMorgan Chase & Co.
) at Neutral. This was based on the company's strong
second-quarter results, which surpassed the Zacks Consensus
Estimate. However, higher operating expenses remain a cause of
JPMorgan's second-quarter earnings came in at $1.60 per share,
substantially beating the Zacks Consensus Estimate of $1.44.
Results benefited largely from improved top line and
significantly lower provision for credit losses, partially offset
by a rise in non-interest expenses.
Moreover, the Zacks Consensus Estimate for 2013 advanced 3.7% to
$5.95 per share over the last 60 days. Similarly, for 2014, the
Zacks Consensus Estimate increased 2.2% to $6.14 per share, over
the same time-frame. JPMorgan currently carries a Zacks Rank #3
The key reason behind JPMorgan's stable earnings amid the ongoing
sluggish economic recovery is its business diversification.
Moreover, the company is an asset for yield-seeking investors due
to its price appreciation and steady capital deployment
activities. Further, the company's asset quality continues to
improve and its balance sheet position remains strong.
However, JPMorgan's top-line growth is expected to slacken in the
upcoming quarters, owing to weak trading revenues and net
interest margin contraction. Additionally, with the thrust of new
banking regulations, there will be pressure on fees and loan
growth is likely to remain weak. Further, stricter capital
requirements are expected to considerably lower JPMorgan's
flexibility with respect to its business investments.
Other Banks Worth Considering
While we prefer JPMorgan, other better performing banks include
Wells Fargo & Company
The PNC Financial Services Group, Inc.
). While BankUnited carries a Zacks Rank #1 (Strong Buy), Wells
Fargo and PNC Financial carry a Zacks Rank #2 (Buy).
BANKUNITED INC (BKU): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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