JPMorgan Improving: Could Easing Of Basel Help More?
Among the 22 stocks in the Banks-Money Center group,JPMorgan Chase ( JPM ) is No. 1 in earnings.
The global financial company's EPS Rating is 95, which puts it in the top 5% of all the stocks in IBD's database.
About a week ago, the big-cap company reported results for the fourth quarter and the full year.
Quarterly earnings jumped 54% on a year-ago basis. The Street expected a 29% increase. Revenue missed but accelerated to 7%, up from 3% in the previous quarter.
For the full year, earnings grew 16%, while revenue eased 2%.
The Street's consensus view estimates 2013 EPS growth at only 3%, but there are factors that could make that estimate low.
JPMorgan CEO Jamie Dimon has been an outspoken critic of the Basel international banking rules, which tighten regulations on bank capital. Critics say putting a regulatory squeeze on banks hasn't made the system safer -- it's just made economic recovery harder.
However, earlier this month central banks loosened a portion of the Basel III rules. While that isn't a complete fix for the problem regulators created, it is a step in the right direction, critics say.
"This suggests a more robust growth picture for 2013," Steve Hanke, a Johns Hopkins economics professor and longtime critic of Basel, recently wrote in Globe Asia magazine.
Hanke added that if the central bankers "were to scale back Basel's capital-adequacy requirements, bank money growth would almost certainly kick into a higher gear."
The economy and JPMorgan's earnings presumably would benefit from such developments.
For all the problems in the financial sector in recent years, JPMorgan's fundamentals are improving in many respects.
Return on equity was 11% in 2012, up for a fourth year in a row. During the recession, ROE fell to 3%.
The three-year EPS Stability Factor is 10, a sharp improvement from 47 over five years. The gauge runs from 0 (calm) to 99 (wild).
Fund support was essentially unchanged in the second half of 2012, but Fidelity Contrafund and Magellan added to their positions.
The dividend yield is 2.6%.