JPMorgan Chase (JPM) Stock Declines as it Nears Fed, DOJ Forex Settlement

NEW YORK (TheStreet) -- JPMorgan Chase (JPM) shares are down 0.54% to $64.01 in trading on Wednesday following reports that the investment firm is in advanced talks with regulators to settle previously unannounced investigations into its foreign exchange trading activities, according to Reuters.

The company said that it is in talks with the Department of Justice and Federal Reserve concerning a settlement for alleged rules violations in a foreign exchange market that has seen increased regulatory scrutiny in recent years.

The world's largest bank did lower its expected litigation expense estimates for the year to $5.5 billion from $5.8 billion in a security filing with the Securities and Exchange Commission, however, despite the admission of the new investigation into its forex dealings. 

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

"We rate JPMORGAN CHASE & CO (JPM) 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, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • JPM's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • JPMORGAN CHASE & CO has improved earnings per share by 13.3% 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 year. We feel that this trend should continue. During the past fiscal year, JPMORGAN CHASE & CO increased its bottom line by earning $5.29 versus $4.32 in the prior year. This year, the market expects an improvement in earnings ($5.86 versus $5.29).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 12.1% when compared to the same quarter one year prior, going from $5,274.00 million to $5,914.00 million.
  • The gross profit margin for JPMORGAN CHASE & CO is currently very high, coming in at 89.03%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.78% significantly outperformed against the industry average.
  • You can view the full analysis from the report here: JPM Ratings Report
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