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Big Banks: Post-Election Bloody Aftermath Losers


Shares of JPMorgan Chase (JPM - Get Report) declined 6% on Wednesday to close at $40.46. The shares have now returned 25% year-to-date, following a 20% decline during 2011.

The shares trade for 1.1 times tangible book value, according to Thomson Reuters Bank Insight, and for eight times the consensus 2013 EPS estimate of $5.32.

JPMorgan's shares already have an attractive dividend yield of 2.97%, based on a quarterly payout of 30 cents, but the company's $15 billion common stock buyback plan was suspended in May, after CEO James Dimon announced that the company was facing major losses over the hedging activity of its Chief Investment Office. The company still showed a second-quarter profit of $5.0 billion, or $1.21 a share, despite $4.4 billion in hedge trading losses, followed by record earnings of $5.7 billion, or $1.40 a share during the third quarter.

Despite the second-quarter trading turmoil, JP Morgan Chase has been a good earnings performer, with operating returns on average assets (ROA) improving steadily from 0.76% to 1.01% over the past five quarters, according to Thomson Reuters Bank Insight.

Dimon has indicated that he expects JPMorgan to resume share buybacks during 2013. O'Connor expects JPMorgan's dividend payout to increase to $5.567 billion in 2013 from $4.656 billion in 2012, with the stock's "implied yield" climbing to 3.3%. The analyst said that "we believe expectations are too high for JPM in particular," for the total return of capital during 2013, and he doesn't expect JPMorgan to resume common share buybacks in next year.

JPM Chart JPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.
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