1. JPMorgan Chase
Shares of JPMorgan Chase closed at $42.09, returning 30% year-to-date, following a 20% decline during 2011.
The shares trade for 1.2 times tangible book value, and for eight times the consensus 2013 EPS estimate of $5.30. Based on a quarterly payout of 30 cents, the shares have a dividend yield of 2.85%.
JPMorgan 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 hedge trading losses. In Sept. 2011, the company earned $4.3 billion, or $1.02 a share.
The company suspended its share buyback program in May, after CEO James Dimon first announced the hedge trading losses. During the third-quarter earnings conference call, Dimon the company might resume share repurchases in the first quarter, but said buybacks before the next round of Federal Reserve stress tests would be "immaterial."
Dimon also said during the call that "the Firm reported strong performance across all our businesses in the third quarter of 2012. Revenue for the quarter was $25.9 billion, up 6% compared with the prior year, or 16% before the impact of [debit valuation adjustments]."
Dimon added that "business Banking loan balances grew for the eighth consecutive quarter to a record $19 billion, up 8% compared with the prior year," while "Mortgage Banking originations were $47 billion, up 29% compared with the prior year," credit card sales volume increased by 11% year-over-year, and "Commercial Banking reported record revenue and grew loan balances for the ninth consecutive quarter to a record $124 billion, up 15% compared with the prior year." Commercial Banking loans grew 3% from the previous quarter.
Total loans declined 1% sequentially but grew 4% year-over-year, to $721.9 billion, as of Sept. 30.
Noninterest revenue grew28% sequentially and 19% year-over-year, to $14.2 billion in the third quarter, with $2.0 billion in revenue from principal transactions, growing from $427 million in losses the previous quarter, and revenue of $1.4 billion a year earlier. Third-quarter mortgage banking and related income totaled $2.4 billion, increasing from $2.3 billion in the second quarter, and $1.4 billion in the third quarter of 2011.
JPMorgan reported third-quarter net interest income of $11.0 billion declining from $11.1 billion the previous quarter and $11.8 billion a year earlier, as the company's core net yield on interest-earning assets narrowed to 2.92% during the third quarter, from 3.00% during the second quarter, and 3.14% during the third quarter of 2011.
For the 12-month period ended Sept. 30, the company's ROA has been 0.84% and its ROE has been 13.32%, according to Thomson Reuters Bank Insight.
Ramsden's price target for JPMorgan Chase is $50. The analyst estimates the company will earn $5.35 a share in 2013, followed by 2014 EPS of $5.70.
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Written by Philip van Doorn in Jupiter, Fla.