Jim Cramer: Why You Shouldn't Bottom-Fish After J.P. Morgan (JPM), Wells Fargo (WFC) Earnings

NEW YORK (TheStreet) -- On the heels of J.P. Morgan  (JPM) and Wells Fargo's  (WFC) earnings reports, TheStreet's Jim Cramer says he is looking at J.P. Morgan when the yield is at 3.25% and investors are "throwing it away." He adds J.P. Morgan's execution was poor.

Wells Fargo, on the other hand, had "absolutely terrific" execution, but Cramer notes the stock is priced for perfection. He thinks both stocks will come down and believes the whole banking sector is for sale. "Don't bottom fish yet," Cramer says. "The bottom isn't here."

Must Watch: Jim Cramer on JPMorgan, Wells Fargo Bank Earnings

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates JPMORGAN CHASE & CO as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation: 

"We rate JPMORGAN CHASE & CO (JPM) a BUY. This is driven by a number of strengths, 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 solid stock price performance, expanding profit margins and attractive valuation levels. 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:

  • Compared to its closing price of one year ago, JPM's share price has jumped by 29.47%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JPM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for JPMORGAN CHASE & CO is currently very high, coming in at 90.17%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.09% is above that of the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.1%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • JPMORGAN CHASE & CO's earnings per share declined by 6.5% 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 ($5.90 versus $4.32).
  • You can view the full analysis from the report here: JPM Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Separately, TheStreet Ratings team rates WELLS FARGO & CO as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate WELLS FARGO & CO (WFC) 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 solid stock price performance, growth in earnings per share, expanding profit margins, good cash flow from operations and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 35.88% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WELLS FARGO & CO has improved earnings per share by 9.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $3.89 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.89).
  • The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 93.57%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.85% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 72.70% to $14,423.00 million when compared to the same quarter last year. Despite an increase in cash flow of 72.70%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 409.51%.
  • 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 other companies in the Commercial Banks industry and the overall market on the basis of return on equity, WELLS FARGO & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: WFC Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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