JPMorgan's shares are already the cheapest among the "big four" U.S. banks, based on forward P/E ratios, The shares closed at $50.60 Tuesday and traded for 8.3 times the consensus 2014 earnings estimate of $6.11 a share, among analysts polled by Thomson Reuters.
- Shares of Bank of America (BAC) closed at $14.11 Tuesday and traded for 10.4 times the consensus 2014 EPS estimate of $1.36.
- Wells Fargo closed at $41.11 Tuesday and traded for $10.2 times the consensus 2014 EPS estimate of $4.02.
- Citigroup closed Tuesday at $48.24 and traded for 8.8 times the consensus 2014 EPS estimate of $5.46.
Among the big four, only Wells Fargo has had higher returns on assets and common equity than JPMorgan over the past several years. The regulatory and political onslaught against JPMorgan Chase at this late stage of the banking industry's recovery is clearly weighing on the shares, and depending on how fines affect this years' bottom line, the bank may have to pull back on plans for a dividend increase or share buybacks when it submits its next annual capital plan to the Federal Reserve as part of the 2014 stress tests in March.
This could present quite an opportunity for patient investors who have faith in CEO James Dimon's ability to steer JPMorgan through the continued stream of federal investigations, regulatory actions and fines. The stock has a very low valuation on a historical basis and there's no denying that JPMorgan knows how to make a lot of money.
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