NEW YORK ( TheStreet) -- The dismal year-to-date performance of JPMorgan Chase's ( JPM) stock underscores the case why you should invest in the bank now. A few years from now, you may be looking back at the killing you missed on JPMorgan Chase. The shares are bargain-priced right here, and you can add on the dips. Shares of the nation's second-largest bank by total assets -- running a close second to Bank of America ( BAC) as of June 30 -- closed at $32.30 Monday, for a 22% year-to-date decline. This compared to a 53% decline for shares of Bank of America, while Citigroup ( C) was down 44% to $24.49 and Wells Fargo ( WFC) was down 15% to $26.13. In comparison, the benchmark KBW Bank Index was down 28% year-to-date, closing Monday at 37.45.
So JPMorgan's stock performance measures up decently against the industry's performance. With the largest banks looking at a very rough third-quarter for trading and capital markets revenue, along with lower fee income from the new rules lowering the interchange fees that banks charge merchants to process debit card purchases -- as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama last July -- JPMorgan has seen a slew of analyst cuts to its earnings estimates and price targets. The consensus among analysts polled by FactSet is for JPMorgan to report third-quarter earnings of 96 cents a share, following EPS of $1.27 in the second quarter and $1.01 in the third quarter of 2010. Here are 5 reasons to buy JPMorgan Chase now:
|JPMorgan Chase CEO Jamie Dimon|
5. The shares are cheap.The shares trade for less than six times the consensus 2012 EPS estimate of $5.24, and for just a hair above the company's June 30 tangible book value of $31.52, according to SNL Financial.
4. The dividend ain't too shabby.JPMorgan is paying a quarterly dividend of 25 cents a share, which translates to a not-too-shabby dividend yield of 3.10% based on Monday's market close. That dividend, being comfortably supported even by reduced earnings estimates, for a company trading just above book value, which has posted earnings in excess of the 25-cent payout for the past 12 quarters, seems very solid.
3. Buybacks could provide more support for the shares.There could be further support for the shares from significant buybacks, as the company' board of directors has authorized a $15 billion multi-year share repurchase program, "of which up to $8.0 billion is approved by the Federal Reserve for 2011, to, at a minimum, repurchase the same amount of shares that it issues for employee stock-based incentive awards."
2. Analysts love the stock.Despite the revenue headwinds for JPMorgan -- and for all of the large U.S. banks for that matter -- most analysts are mostly onboard the JPMorgan bandwaggon. KBW analyst David Konrad said in a Monday report that he expects JPMorgan Chase "to report EPS of $0.85, which includes approximately $0.20 per share in litigation expenses," and that investors will make "effort to obtain additional information about the depth and duration of the slowdown in economic activity--both domestically and globally." Konrad expects the company to "to post revenues of $22.6 billion, down 18% linked quarter, consisting of
The consensus 12-month price target for JPMorgan's shares according to analysts polled by FactSet is $48.35, implying 50% upside for the shares.