NEW YORK (TheStreet) -- Shares of JPMorgan (JPM) are rising 0.71% to $68.47 on Tuesday after analysts at Bernstein today predicted a bull market for U.S. bank stocks, picking the commercial investment banking institution as one of its two best companies, according to The Wall Street Journal.
The firm cited three key points for its bullish outlook.
First, rising rates are beneficial for bank stocks, as banks will "hold up well given market expectations regarding their asset sensitivity." Second, unlike rival sectors, banks are still trailing their average profitability levels. Third, bank valuations are in line with historical averages, currently trading at 12.4x forward earnings, compared to a historical median of 12.2x, the firm noted.
Along with JPMorgan, Citigroup (C) was one of Bernstein's two best picks, thanks to a combination of low valuations, trading exposure and dividend yields.
Shares of Citigroup are gaining 0.44% to $56.90 on Tuesday.
Separately, 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 good cash flow from operations. 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 0.1%. 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 not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in 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 ($5.85 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.
- Net operating cash flow has slightly increased to $14,879.00 million or 1.44% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -37.29%.
- You can view the full analysis from the report here: JPM Ratings Report