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JPMorgan Settlement Could Wipe Out Q3 Earnings

Here's how those valuations compare to the rest of the "big six" U.S. banking club:

  • Shares of Bank of America closed at $14.14 Wednesday and traded for 10.4 times the consensus 2014 EPS estimate of $1.36.
  • Wells Fargo also traded for 10.4 times its consensus estimate of $4.01, when the shares closed Wednesday at $41.81. The contrast between Bank of America and Wells Fargo is striking, as Wells Fargo has been, by far, the strongest earnings performer among the "big six" over the past five years, while Bank of America is still a weak overall earnings performer.
  • Shares of Morgan Stanley closed at $27.22 Wednesday and traded for 10.5 times the consensus 2014 EPS estimate of $2.59.
  • Goldman Sachs closed at $162.31 Wednesday and traded for 10.5 times the consensus 2014 EPS estimate of $15.48.

Investors who may have thought it was too late to make a killing on the recovery of the largest U.S. banks may be looking at a golden opportunity to load up on shares of JPMorgan Chase during this period of awful daily headlines. That assumes the investors who go in have strong enough stomachs to allow the company's underlying operating earnings power to shine over a period of several years.

JPMorgan's shares were up 0.3% in afternoon trading Thursday, to $51.88. The broad indices were all showing solid gains, while the KBW bank index was down 0.2% to 62.60.

JPM Chart JPM data by YCharts

-- 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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