NEW YORK ( TheStreet) -- Maybe the "London Whale" was a blessing in disguise for investors.
JPMorgan Chase has bounced back in a big way from the hedge trading losses in the firm's Chief Investment Office (CIO) first announced by CEO James Dimon in May, and the shares are still cheaply priced to book value and forward earnings.
And unlike other "cheapies," including Bank of America (BAC - Get Report) and Citigroup (C - Get Report), which may well be excellent buys for long-term investors based on low valuations and "normalized earnings" potential, JPMorgan Chase is already bringing home the earnings bacon.
JPM on Friday reported third-quarter earnings of $5.7 billion, or $1.40 a share, increasing from earnings of 5.0 billion, or $1.21 a share, during the second quarter, when the company booked $4.4 billion in losses from the CIO hedge trading debacle. In Sept. 2011, the company earned $4.3 billion, or $1.02 a share.Here's a very quick snapshot of earnings performance and price valuations for the "big four" U.S. banks:
- JPMorgan's third-quarter operating return on average assets (ROA) was 0.99% and its return on average tangible common equity (ROE) was 17.20%, according to Thomson Reuters Bank Insight. For the 12-month period ended Sept. 30, the company's ROA was 0.84%, and its ROE was 14.56%. The shares closed at $41.62 Friday, trading for 1.2 times tangible book value, according to Thomson Reuters Bank Insight, and for eight times the consensus 2013 earnings estimate of $5.21 a share, among analysts polled by Thomson Reuters.
- For Wells Fargo (WFC - Get Report), the third-quarter ROA was 1.46% and its ROE was 16.69%. The company has set the earnings "gold standard" for the big four, with an ROA of 1.36% and an ROE of 15.14%, for the 12-month period ended Sept. 30. The shares closed at $34.25 Friday, and traded for 1.5 times tangible book value, and for 9.4 times the consensus 2013 EPS estimate of $3.64.
- Citigroup announced its third-quarter earnings this morning, reporting an operating return on assets of 1.40% and a return on average common equity of 8.4%, excluding debit valuation adjustments (DVA), a tax benefit, and a $4.7 billion pre-tax loss on the company's sale of a 14% stake in the Morgan Stanley Smith Barney joint venture, and the write-down of its remaining stake in the joint venture. With these items included, the company's return on common equity was 1%. Leaving the messy third quarter aside, the company's ROA for the 12-month period ended June 30 was 0.55%, while its ROE was 7.22%. Citi's shares closed at $34.75 Friday, trading for 0.7 times their reported June 30 tangible book value of $52.70, and for 7.6 times the consensus 2013 EPS estimate of $4.55.
- Bank of America will announce its third-quarter results on Wednesday. For the 12-month period ended June 30, the company's ROA was 0.52% and its ROE was 7.46%. The shares closed at` $9.12 Friday, trading for 0.7 times tangible book value, and for 10 times the consensus 2013 EPS estimate of 91 cents.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts