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JPMorgan Chase: Financial Winner

Moving back to the financials, the KBW Bank Index (I:BKX) rose over 1% to close at 49.33, with all but four of the 24 index components ending the week with gains.

JPMorgan and the Fiscal Cliff


JPMorgan Chase's shares have now returned 32% year-to-date, following a 20% decline during 2011.

The shares trade for 1.2 times tangible book value, according to Thomson Reuters Bank Insight, and for eight times the consensus 2013 earnings estimate of $5.30. The consensus 2014 EPS estimate is $5.69.

Based on a quarterly payout of 30 cents, the shares have a dividend yield of 2.82%.

Guggenheim analyst Marty Mosby on Friday said in a report that for large-cap banks, "earnings per share could remain relatively flat in 2013 if impacts from Fiscal Cliffs push the economy back into a mini-recession," but under that scenario, earnings would bounce back by over 25% in 2014, "as a traditional bank recovery would ensue once the economy regained its current momentum."

Under his "baseline" scenario, with the fiscal cliff being averted, Mosby estimates that JPMorgan Chase's revenue will be flat in 2013 from 2012, but that efficiency improvements and share repurchases will lead to an increase in earnings per share of 9%. Under his "recession" scenario, Mosby sees JPMorgan's revenue declining by 3%, with EPS still growing by 7%.

Mosby rates JPMorgan Chase a "Buy," with a $55 price target, and is out in front of the consensus, estimating the company will earn $5.60 a share in 2013, increasing to $6.60 in 2014.

JPM ChartJPM data by YCharts

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

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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