JPMorgan (JPM) in Settlement Talks With DOJ

New York (TheStreet) -- JPMorgan Chase (JPM) has entered into last-minute settlement negotiations with the Justice Department, according to a Reuters' exclusive. The case, which was to be filed today, charges the bank with selling mortgage bonds in California in violation of federal laws from 2005 to 2007.

The case is the latest in a string of litigation against the banking giant. Details emerged this morning regarding a lawsuit between the National Credit Union Administration and 13 international banks, JPMorgan among them, alleging manipulation of LIBOR which caused five credit unions to bankrupt.

Late last week, JPMorgan agreed to pay more than $920 million to various regulators in its London Whale settlement.

"We remain patient on JPMorgan, as we recognize the bank has its hands full with the regulators and higher legal costs," said Jim Cramer and Stephanie Link in their premium 'Action Alerts Plus' memo. "Should J.P. Morgan get this issue behind it quickly, we expect the stock to rally."

JPMorgan shares are down 1.22% to $50.83 as of 1:25 p.m. EST. Shares traded have exceeded their one-month average daily volume, with 18.6 million shares changing hands compared to 18.24 million. Overall, the bank is lagging the S&P 500 which is up 0.26%.

TheStreet Ratings team rates JPMorgan as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate JPMorgan a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, compelling growth in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Since the same quarter one year prior, revenues rose by 10%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 63.2% to $68,520 million when compared to the same quarter last year.
  • The net income increased by 31% when compared to the same quarter one year prior, rising from $4,960 million to $6,496 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization.
  • Compared to where it was trading one year ago, J.P. Morgan is up 27.6% to its most recent closing price of 52.75. Looking ahead, although the push and pull of a bull or bear market could certainly alter the outcome, our view is that this stock's positive fundamentals give it good potential for further appreciation.

Written by Keris Alison Lahiff.

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