JPMorgan Chase Slips On Mix Results

Tuesday, July 13, 2021 | Thomas Hughes
JPMorgan Chase Slips On Mix Results

A Great Quarter For JPMorgan Despite Mixed Results

JPMorgan Chase (NYSE: JPM) set the tone for the second-quarter earnings cycle with a better-than-expected report. The caveat is that, while the headline figures all beat their consensus target, the internal metrics are a little mixed. The takeaway for investors is that consumer banking is strong, the company is more than well-capitalized, and the outlook for the second half of the year is still bright if a little dimmer than it was before. 

JPMorgan: A Top-line Beat Despite Fixed-Income Weakness 

JPMorgan reported strong systemwide top-line results despite a market downturn in fixed-income results. The company posted $30.50 billion in net consolidated revenue which beat the consensus by $790 million dollars or 260 basis points but declined on both a sequential and year-over-year basis. The company’s revenue is down 5.4% sequentially and 7.9% from last year but still managed to rise 5.7% in the 2-year comparison which we find to be the most compelling figure.

On a segment basis, wealth management was strongest with a 1% sequential gain and 20% year-over-year gain. Commercial Banking was the second strongest with a 4% sequential gain and 3% year-over-year gain in revenue. Consumer banking is also relatively strong with a 2% sequential gain and a 3% gain from last year. Consumer and Community banking was bolstered by strong results in the business sub-segments that were offset by a decline in home and auto loans. That news is both good and bad as it shows strength and small businesses the weakness in both home and auto sales, two of the driving forces of the current economy.

Corporate Investment Banking was the only area of real weakness and that firmly centered in the fixed-income market. Investment banking grew 1% and equities-based revenue grew by 13% while the fixed-income sub-segments declined 44%.

Moving down to the earnings the results are just as good and just as mixed. The good news is that GAAP earnings of $3.78 beat by $0.60 and strengthen the company's ability to pay its dividend, increase the distribution, and engage in share buy-backs. The caveat is that credit cost provided a net benefit of $2.3 billion or $0.75  of EPS because credit charge-offs were far less than expected. That allowed the company to release $3 billion of net credit reserves, the bad news is that adjusted earnings would have fallen short of the consensus. 

JPMorgan Chase Lowers Guidance

JP Morgan didn't give formal guidance for earnings and revenue but it did give guidance for net interest income. The company reports a net interest income of $25.63 billion in the first half and expects $52.50 billion for the full year. The new guidance is $2.50 billion lower than the original guidance due to negative consumer loan growth and will drag on results in the third and fourth quarters.

Shares of JPMorgan Chase fell almost 1% in early pre-market trading and may move lower but we don't think investors should run for the exit yet. Price action is still well above recent support marked by a double bottom reversal pattern at the $150 level. Price action may move down to retest this level in the near term, but we do not expect to see it broken. Assuming support is confirmed at $150 or higher, we expect to see shares of the stock trend sideways over the summer and then move higher later in the year. 

JPMorgan Chase Slips On Mix Results

Should you invest $1,000 in JPMorgan Chase & Co. right now?

Before you consider JPMorgan Chase & Co., you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and JPMorgan Chase & Co. wasn't on the list.

While JPMorgan Chase & Co. currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
JPMorgan Chase & Co. (JPM)2.5$158.16+0.7%2.28%10.55Buy$166.69
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.