NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Twitter's (TWTR) deal with Amazon (AMZN) shows what the company needs to do, but the stock is not at a price worth buying because insiders that are able to sell will take advantage of the strength and do so.
Cramer says April was not a good month for financial stocks. J.P. Morgan (JPM) announced it extrapolated its numbers to determine trading revenue could drop 20%, but Cramer called this a bit extreme because "these places are vibrant and they can come back."
Cramer also says people did not see the treasuries going to where they are. He thinks they will move to 2.4% based on the positions of Italy, Spain and Portugal. He also notes Goldman Sachs (GS) is down heavily and says "these places all seem to have not gotten the curve right." Some investors have been expecting the financial stocks to bottom and come back, but Cramer says it's not happening.
"We rate JPMORGAN CHASE & CO (JPM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.5%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for JPMORGAN CHASE & CO is currently very high, coming in at 88.15%. Regardless of JPM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JPM's net profit margin of 20.99% compares favorably to the industry average.
- JPMORGAN CHASE & CO's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, JPMORGAN CHASE & CO reported lower earnings of $4.32 versus $5.19 in the prior year. This year, the market expects an improvement in earnings ($5.57 versus $4.32).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: JPM Ratings Report
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