|Bid||0.00 x 1100|
|Ask||0.00 x 1100|
|Day's Range||50.98 - 51.42|
|52 Week Range||41.02 - 57.92|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.32|
|Expense Ratio (net)||0.35%|
JPMorgan (NYSE:JPM) reported its first-quarter results on Apr. 12. JPM stock gained almost 5% on the news. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsCitigroup (NYSE:C) announced mixed results before the markets opened on Monday. Its share price barely moved. As far as large bank stocks, JPM stock appears to be in a league of its own. Can any other bank stock touch it? * 10 S&P 500 Stocks to Weather the Earnings Storm Let's consider a few different financial metrics to determine if Jamie Dimon's baby is the obvious choice among large bank stocks. What Is Large?Before we consider our options, it's essential that we come up with some definition of large.As I scan a list of bank ETFs, the Invesco KBW Bank ETF (NYSEARCA:KBWB) catches my attention because of its laser-like focus on 24 bank stocks. JPM stock is its number one holding, accounting for 8.56% of its value. KBWB tracks the performance of the KBW Nasdaq Bank Index, which in turn tracks the performance of the leading banks and thrifts that are publicly traded in the U.S. They are primarily sizable, national, money-center banks, with a few regional banks and thrift institutions thrown into the mix. The index uses a float-adjusted, market cap-weighting methodology. The stocks that are weighted lower generally have smaller market caps. Evaluating JPM's PerformanceThe easiest thing to do would be to compare JPMorgan's Q1 results to those of Citigroup.However, that wouldn't be any fun. So, instead, I'm going to compare JPM to my favorite U.S. bank, SVB Financial (NASDAQ:SIVB), where entrepreneurs and innovators go for their financial services needs, both business and personal. Unfortunately, SIVB doesn't report its first-quarter results until Apr. 25, so I'll use the banks' 2018 numbers to compare them. The NumbersFinancial Metric JPMorgan SVB Financial Net Interest Margin 2.51% 3.57% Return on Average Assets 1.24% 1.76% Efficiency Ratio 61.21% 45.50% Tier 1 Capital Ratio 13.7% 13.4% Return on Equity 13% 20.57 By looking at these five financial metrics, it's clear that SIVB stock is very attractive relative to JPM stock. However, there are a couple of caveats to these numbers.First, SVB Financial is much smaller than JPMorgan.In 2018, SIVB had $2.6 billion of revenue. That's about 2% of JPMorgan's total revenue. JPM had $2.6 trillion of total assets, compared to $55.2 billion for SIVB. The 0.52 percentage-point difference in the banks' return on average assets isn't a big deal, since JPM is so much bigger than SIVB. For example, if JPMorgan had SIVB's return on average assets in 2018, it would have generated $45.7 billion of net income, $13.3 billion more than it did. However, as it stands, JPMorgan's net income in 2018 of $32.5 billion was 59% of SVB Financial's entire asset base. I'm sure Jamie Dimon would love to have some of SIVB's superior numbers, but given JPM's size, that's not very realistic.The second caveat is that SIVB is geared toward commercial banking. In 2018, out of $27.5 billion of its average loans outstanding, 50.8% were worth $20 million or more. Consumer loans and mortgages accounted for just 10% of the bank's total loan portfolio. JPMorgan's total consumer-credit portfolio, including credit cards, was $1.2 trillion, or 46% of its total assets. It focuses much more on retail banking than SIVB. When economies turn south, that can work against JPM stock. But for now, with a relatively strong economy, JPM and JPM stock are sitting pretty. The Bottom Line on JPM StockIf you're interested in owning one of America's biggest and best banks, I don't think there's a better choice than JPMorgan stock.However, if you want to own a piece of one of America's best banks, period, SIVB is a desirable alternative, in my opinion. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy for Spring Season Growth * This Is How You Beat Back a Bear Market * 7 Dental Stocks to Buy That Will Make You Smile Compare Brokers The post Is JPMorgan Stock the Obvious Choice Among Large Banks? appeared first on InvestorPlace.
A slight flattening of the yield curve may hurt bank stocks' profitability, but underwriting of several unicorn IPOs should help these financial ETFs.
Shares of exchange-traded funds that are focused on the financial sector were seeing their best gains since April 1. The Financial Select Sector SPDR ETF was up 2.5% on Friday morning, while the Invesco KBW Bank ETF , focused on large-capitalization banks, advanced 2.4% in early morning action. Those gains, if they hold, would represent the best day for the ETFs since April 1, according to FactSet data. That climb follows better-than-expected first-quarter results from JPMorgan Chase & Co. and Wells Fargo & Co. , which helped to lift the broader market. The performance of large banks can be a bellwether for coming earnings because that group unofficially kicks off earnings season on Wall Street. Better-than-expected performance from banks also can provide clues about the health of the overall economy, particularly as investors and economists worry about the possibility of a recession taking hold. A rise in the banking sector was helping to power the S&P 500 index , with the S&P 500's financial sector gaining about 2%.
An endorsement from one of the greatest value investors of our generation, and a big owner of shares in Wells Fargo, usually is worth its weight in gold.
The House Financial Services Committee easily cleared a bill to provide a safe harbor for banks that work with the legal cannabis industry. The 45-15 vote allows the Secure and Fair Enforcement (SAFE) Banking Act to go to the House floor. Despite the clearance and strong chances for approval in the House of Representatives, the bill's prospects don't look as good in the Republican-controlled Senate.
Mortgage origination is up, but not enough to offset pressure from a flattening, or even inverted, yield curve, analysts say.
Popular gauges of financial institutions on Wall Street traded solidly lower after the Federal Reserve Wednesday downgraded its forecast for U.S. economic growth and indicated that policy makers wouldn't hike rates in 2019. That reaffirmation of its earlier dovishness provides a poor environment for bank's, whose business models perform better in a rising interest-rate environment. The 10-year Treasury note fell to 2.53%, hitting its lowest level since early January of 2018, after the Fed policy update. Meanwhile, the Financial Select Sector SPDR ETF fell 0.6%, while the S&P 500's financial sector was off by 1.2% and the Invesco KBW Bank ETF was 1.8% lower in late-Wednesday action. Although the Federal Open Market Committee held interest rates at a range of 2.25% to 2.50% as expected, it downgraded its economic outlook, dropping its gross domestic product forecast to 2.1% for 2019, from 2.3% before, and said that the winding down of its balance sheet would end in September. Meanwhile, the Dow Jones Industrial Average , the Nasdaq Composite Index and the S&P 500 index all headed modestly higher after the Fed decision.
After a decade-long bull market, it's getting more and more difficult for equities investors to identify value opportunities. Fortunately, Citigroup (NYSE: C) is one of a handful of stocks that stands out as relatively cheap. Conditions for U.S. banks are better than they've been in years. C stock has double the gain of the S&P 500 index so far in 2019. It may soon get even hotter.Source: Shutterstock Even after rallying 23.8% , Citigroup stock still looks cheap. Bank stocks struggled in 2018. Citigroup stock was slammed. Shares were down more than 30% last year compared to a 18.6% drop in the 25-stock Invesco KBW Bank ETF (NASDAQ:KBWB)Citigroup's forward price-to-earnings ratio is just 7.5, one of the lowest valuations in the entire S&P 500. It's also the lowest among its "big four" banking peers -- Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) -- by a wide margin. When growth projections are factored in, Citigroup's price-to-earnings-to-growth (PEG) ratio of 0.57 is extremely low. It's roughly in-line with Bank of America's 0.54 PEG, but well below J.P. Morgan (1.23) and Wells Fargo (1.05).InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn terms of price-to-sales ratio, it's not even close. Citigroup stock trades at a 2.23 sales multiple, roughly half the valuation of Bank of America (4.27) and J.P. Morgan (4.58) and far below Wells Fargo (3.66). * 7 IPOs to Get Excited for in 2019 Finally, Citigroup is the only one of the big four banks to trade below book value. Citigroup's price-to-book value is 0.9. The next closest of its peer group is Bank of America at 1.22. In other words, Citigroup stock price is below the aggregate per-share value of its assets. Banking Conditions Are Getting BetterFor much of the past decade, the business of banking in the U.S. has been an uphill battle. Some might say rightfully so. Banks have faced unprecedented regulatory oversight following the 2008 financial crisis. In addition, near-zero interest rates have made it extremely difficult for banks to grow profits.When interest rates are low, banks have very little wiggle room on their net interest margins, the difference between the rates they charge to borrowers and the rates they pay out to depositors. Lack of wiggle room results in lower profits, which have been hard to come by until the past couple of years.To be sure, the Federal Reserve has been raising interest rates in recent quarters. However, rates remain below historical levels. To make matters worse, the Fed recently indicated is may be putting rate hikes on hold in 2019.Bank investors may be disappointed that conditions aren't better for big banks at this point. But there's no question they are better than they were. Banks may not be seeing any more rate hikes in the near future. But the Fed's fourth-quarter rate hike will not be reflected in Citigroup's numbers until the first quarter. In addition, Citigroup cut costs in the fourth quarter and improved its efficiency despite a difficult fixed-income trading environment.In addition, after paying essentially no dividend for years following the financial crisis, the 2.8% yield on Citigroup stock is now quite appealing. Wall Street Skeptics FadingFinally, after years of skepticism, Wall Street analysts have slowly been joining the bullish camp on Citigroup stock. In February, Jefferies analyst Ken Usdin upgraded Citigroup to "buy" and said a favorable global environment for institutional investors should pay off for C stock investors. Usdin also praised the company's progress in Latin America. He said the stock's risk-reward is "skewed positive, especially if Citi starts showing tangible progress" toward its long-term goal of 13.5% return on average tangible common equity by 2020. He's currently ranked 27th out of 5,233 analysts on TipRanks. * 7 Top-Rated Stocks to Buy for March Bank of America analyst Erika Najarian is also bullish on Citigroup stock. Najarian recently said Citi's efficiency improvements are key for the stock going forward. "C cannot control how the market discounts global risk in the stock, but management can certainly execute on efficiency gains to improve relative valuation," Najarian wrote. She expects a 1.03% efficiency ratio improvement from Citigroup in 2019 and another 2% improvement in 2020. She said that degree of improvement should get Citigroup stock at least on par with book value. Further improvements could get the stock in-line with the book value premiums of its peer group. C Stock's Next CatalystIn the near-term, the next major catalyst for Citigroup stock that Wall Street will be watching are the results of the annual big bank stress tests. Najarian said this year's test conditions were slightly more difficult than expected. However, if Citigroup can pass the test and get approved for an even more aggressive capital return plan this year, it could really get investors attention. At some point, C stock will force investors to pay attention to its low valuation.As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 Retail Stocks Ready to Break Out * 7 Strong Buy Stocks the Street Loves * 10 Best Stocks to Buy and Hold Forever Compare Brokers The post Citigroup Stock Is A Rare Value Among Expensive Financial Services Shares appeared first on InvestorPlace.
Bank stocks and sector-related exchange traded funds were leading the markets higher after recent filings revealed Warren Buffett's Berkshire Hathaway Inc. jumped in on the falling bank stocks to increase his bets on financials, hinting at the possibility of further merger and acquisition activity in the space. Among the top performing non-leveraged ETFs on Friday, the Invesco KBW Bank ETF (KBWB) increased 2.3%, First Trust NASDAQ ABA Community Bank Index Fund (QABA) advanced 2.0% and SPDR S&P Bank ETF (KBE) gained 2.1%. Meanwhile, the broader Financial Select Sector SPDR (XLF) was 1.8% higher.
The biggest bank deal in a decades has put the spotlight on ETFs that could be the best ways for investors to tap the opportunity arising from BB&T and SunTrust merger.
Bank of America revealed better-than-expected fourth quarter results on rising interest rates and lower taxes, lifting bank stocks and financial sector-related ETFs. On Wednesday, the Invesco KBW Bank ...
Fourth-quarter earnings season commences in earnest this week. As is the case during every earnings season, the financial services sector, the third-largest sector weight in the S&P 500, gets the earnings ball rolling. This week alone, more than 31% of the members of the Russell 1000 Financial Services Index step into the earnings confessional. Over the following three weeks, 43.76% of that benchmark's member firms deliver fourth-quarter results. On Monday, Citigroup Inc. (NYSE:C) kicked off this week's parade of bank earnings, reporting a fourth-quarter profit of $4.2 billion, or $1.61 a share, up from $3.7 billion, or $1.28 a share, a year earlier. Analysts expected New York-based Citi to earn $1.55 per share. InvestorPlace - Stock Market News, Stock Advice & Trading Tips On Jan 7, FactSet wrote: "They S&P 500 is expected to report earnings growth of 11.4% for the fourth quarter. What is the likelihood the index will report an actual earnings increase of 11.4% for the quarter? Based on the average change in earnings growth due to companies reporting positive earnings surprises, it is likely the index will report earnings growth above 15% for Q4, but below the 25% growth reported in the previous three quarters." * 8 Dividend Stocks With Growth on the Horizon With a slew of marquee banks reporting earnings this week, some of the following related bank ETFs could be worth monitoring, particularly because expectations for the sector are low heading into this earnings season. ### Financial Select Sector SDPR (XLF) Source: Shutterstock Expense ratio: 0.13% per year, or $13 on a $10,000 investment. The Financial Select Sector SDPR (NYSEARCA:XLF) is not a dedicated bank ETF, but it is the largest financial services ETF on the market and it does allocate over 43% of its weight to bank stocks, more than double its second-largest sector weight. Coming off a 13% loss last year, XLF could use the assistance of some better-than-expected earnings reports to see its near-term fortunes boosted. There are immediate catalysts with the potential to determine this sector ETF's near-term performance. JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo Co. (NYSE:WFC), which combine for 16.49% of this bank ETF's weight, report earnings this week. This bank ETF has work to do to recapture investors' confidence. As XLF slumped last year even amid four interest rate hikes by the Federal Reserve, investors yanked $5.35 billion from the fund, a total exceeded by just four other ETFs. Investors remain leery of this bank ETF as highlighted by outflows from XLF of more than $794 million last week. ### SPDR S&P Bank ETF (KBE) Source: Shutterstock Expense ratio: 0.35% per year, or $35 on a $10,000 investment. As its name implies, the SPDR S&P Bank ETF (NYSEARCA:KBE) is a dedicated bank ETF, putting it front and center among the primary options to consider amid this week's onslaught of bank ETFs. The $2.72 billion KBE tracks the S&P Banks Select Industry Index and holds 85 bank stocks across all three market capitalization segments (large, mid and small). This bank ETF's holdings have a weighted average market value of $22.92 billion, indicating it tilts toward larger bank stocks. * 5 Fallen-Angel Stocks That Have Been Oversold KBE is an equal-weight ETF and none of its components command weights of more than 1.73%, indicating single stock risk is minimal with this bank ETF. That also means KBE needs the assistance of a lot of strong reports to deliver earnings season upside. ### Invesco KBW Bank ETF (KBWB) Source: Shutterstock Expense ratio: 0.35% per year, or $35 on a $10,000 investment. The Invesco KBW Bank ETF (NASDAQ:KBWB) is another dedicated bank ETF, but it features significant differences relative to the aforementioned KBE. KBWB tracks the widely followed KBW Nasdaq Bank Index and is a cap-weighted fund. KBWB holds just 24 stocks and is dominated by the largest U.S. banks. That means this bank ETF is bound to be tested this week. Bank of America Corp. (NYSE:BAC), JPMorgan Chase and Wells Fargo combine for about 24% of KBWB's weight. As is the case with other bank ETFs, KBWB leans heavily toward the value factor because financial services stocks have been widely regarded as value plays for over a year. Over 78% of KBWB's holdings are considered large- and mid-cap value plays. ### iShares U.S. Financials ETF (IYF) Source: Ken Teegardin via Flickr Expense ratio: 0,43% per year, or $43 on a $10,000 investment. The $1.69 billion iShares U.S. Financial Services ETF (NYSEARCA:IYF) tracks the Dow Jones U.S. Financials Index and has a deeper bench than some rival bank ETFs as highlighted by a roster of 285 stocks. Like the aforementioned XLF, IYF is more of a diversified financial services ETF. That said, IYF allocates 29.58% of its weight to bank stocks, making that the fund's largest industry weight. Five of IYF's top 10 holdings are bank stocks and all five of those names deliver fourth-quarter results this week. Many of the same stocks that dominate XLF and KBWB are important to IYF's performance as well. "Analysts are expecting a decent set of numbers, given an economy that seems in good shape based on holiday retail sales and employment numbers, subdued inflation and a more dovish Federal Reserve," reports MarketWatch. * 8 Dividend Stocks With Growth on the Horizon IYF is up 3.73% to start 2019. ### Invesco S&P 500 Equal Weight Financials ETF (RYF) Source: Shutterstock Expense ratio: 0.40% per year, or $40 on a $10,000 investment. The Invesco S&P 500 Equal Weight Financials ETF (NYSEARCA:RYF) can be seen as an equal-weight alternative to XLF, meaning no single stock charts the course for this bank ETF. RYF actually features lower bank exposure than XLF as insurance providers and capital markets are larger industry weights in the equal-weight fund than traditional banks. Still, RYF has potency as a bank earnings season play. While it may be in the spotlight this week on par with KBWB or XLF, the equal-weight bank ETF could be worth considering in the latter stages of bank earnings season (next week and into early February). RYF is another example of a bank ETF with value tendencies. Approximately 60% of the fund's 68 holdings are classified as value stocks. Todd Shriber owns shares of XLF. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Companies That Could Post Decelerating Profits * 10 A-Rated Stocks the Smart Money Is Piling Into * Mizuho: 7 Long-Term Value Stocks to Buy Now Compare Brokers The post 5 Best Bank ETFs for This Week's Earnings Avalanche appeared first on InvestorPlace.
Earnings beat prospect in Q4 for banks may be bleak, but a steepening yield curve and cheaper valuation could boost bank ETFs in the near term.
Sustained focus on increasing deposits and providing quality loans has helped Citigroup (C) strengthen its balance sheet. Its total assets increased 2% YoY (year-over-year) to ~$1.93 trillion at the end of the third quarter of 2018 mainly due to higher deposits, new assets, rate spreads, increased lending, and broking assets. However, the disposal of some legacy assets partially offset the growth.