Will JPMorgan Overcome Legal Issues & Exhibit Growth? - Analyst Blog
On Feb 27, 2015, we issued an updated research report on JPMorgan Chase & Co. JPM. Though legal charges continue to dominate the company’s results, effective cost control and a robust capital position remain the strengths.
Rising litigation issues have been adversely impacting JPMorgan’s profitability. However, the company has been easing the macroeconomic and fundamental pressure with its cost containment and restructuring initiatives. Driven by the divestiture of non-core operations to enhance focus on traditional banking activities, cost savings are anticipated in 2015.
Moving onto the bank’s capital deployment initiatives, JPMorgan continues to shell out a quarterly dividend of 40 cents per share, which was last hiked in May 2014. Moreover, the company has a steady share repurchase program in place. This has helped the company win investors’ confidence despite reporting earnings miss for the last quarter. The share price of the company has risen over 5% since the latest earnings release.
On the flip side, strained revenue generation continues to be a major setback for JPMorgan. The muted top-line growth will continue to impact financials going forward on the back of persistent weak mortgage banking revenues and net interest margin (NIM) contraction. In addition, fee income is expected to remain pressurized owing to the enforcement of new banking regulations.
On account of consistently recovering retail banking performance as well as ongoing cost-containment and restructuring efforts, analysts are bullish on JPMorgan’s future prospects. Hence, over the last 30 days, the Zacks Consensus Estimate rose marginally to $5.83 and $6.48 per share for 2015 and 2016, respectively.
JPMorgan currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Some better-ranked finance stocks include Meridian Bancorp, Inc. EBSB, Southern First Bancshares, Inc. SFST and Woori Bank Co., Ltd. WF. All these stocks hold a Zacks Rank #1 (Strong Buy).
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