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JPMorgan's Projections Underline Just How Cheap the Stock Is

JPMorgan pointed out that its tangible book value per share rose to $39 in 2012 from $19 in 2006. Kotowski pointed out that the company had achieved a compounded annual growth rate of 12% "in the midst of the worst financial crisis since the Great Depression."

Next: Stress Test Results


The Federal Reserve will announce the results of its annual stress tests on the nation's largest banks on March 7. These results will gauge the banks' ability to withstand a "severely adverse scenario" that includes a brutal recession beginning this year, while still remaining well capitalized.

The more important date for investors is March 14, when the Fed announces the results of the Comprehensive Analysis and Review (CCAR) of the banks' capital plans through the first quarter of 2014.

JPMorgan Chase is paying a quarterly dividend of $0.30 a share, which translates to a yield of 2.52% based on Tuesday's closing share price.

Bank of America Merrill Lynch analyst Erica Penala in a report on Wednesday said that her earnings estimates for JPMorgan assume "$5bn in dividends and $10bn in share buybacks" during 2013, with the quarterly dividend rising to $0.32.

Penala rates JPMorgan a "buy," and on Wednesday raised her price objective for the shares to $55.00 from $52.00. The analyst also raised her 2013 EPS estimate to $5.85 from $5.70 and her 2014 EPS estimate to $6.00 from $5.92, based on expectations of net income "stability" and a "continued reserve release" in JPMorgan's credit card business.

"JPM remains the cheapest P/E stock in our coverage universe" based on her firm's estimates, Penala wrote, adding that "if the market continues to sell risk, JPM should outperform its peers."

-- 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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