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The Trefis price estimate for JPMorgan's stock is around $138 per share
Trefis price estimate for JPMorgan
Summary:
In Q4 2019, JPMorgan reported Total Revenues of $28.3 billion, up 9% y-o-y. The banking giant reported strong Consumer Banking revenues in 2019, which was the highest contributing segment in the previous year. This was mainly driven by growth in card transaction fees and service charges on deposits followed by a slight increase in net interest income on consumer banking loans. Also, the bank's trading desks did extremely well in the last quarter, with FICC trading (fixed income, currency, and commodity) witnessing an 86% jump y-o-y.
Going forward, we expect consumer banking and investment banking business to drive revenues in the subsequent year, although negative economic scenario could hamper its growth.
Takeaway & Earnings Summary:
JPMorgan’s stock has gained more than 44% of its value in 2019 with the company’s share price increasing from over $95 in last January to around $138 by year-end. Further, the company’s stock price has averaged just above $116 for the year.Although the company’s stock price has seen some growth in 2019, we believe that the company’s stock has exhausted its growth potential and estimate JPMorgan’s valuation to be $138 per share – slightly higher than the current market price.
Q4 2019 Earnings Summary:
In Q4 2019, JPMorgan reported Total Revenues of $28.3 billion, up 9% y-o-y. This could be attributed to a 31% y-o-y jump in Corporate & Investment Banking followed by a 3% increase in Consumer & Community Banking revenues, partially offset by a 3% y-o-y decrease in Commercial Banking segment.Notably, the growth in the Corporate & Investment Banking segment was driven by an 86% y-o-y increase in revenues from fixed income markets (Fixed Income, Currency, and Commodity trading).The company's adjusted net income margin increased by 3 percentage points, rising from 27.1% in Q4 2018 to 30.1% in Q4 2019.For the first quarter of FY 2020, the consensus estimate for earnings per share is in the range of $2.56 to $2.93 while net revenues are expected to remain around $29.75 billion.
Related Analysis
JPMorgan Revenues: How Does JPMorgan Make Money?JPMorgan Stock (NYSE:JPM)More Trefis Financial Industry Data
JPMorgan's total revenues have grown at an average annual rate of 6.5% over 2016-2019, however, it is expected to grow at a slower pace in the subsequent years.Although Corporate and Investment Banking revenues have increased by 9% over the last 4 years, it is expected to slightly drop in 2020 due to a 4% decline in Treasury & Security Services.On the other hand, Consumer Banking is expected to maintain its growth momentum, leading to expected revenue of $57.4 billion in 2020. This would be driven by growth in card income and higher service charges.Notably, Consumer Banking is the highest contributing segment of the bank with a revenue share of more than 47% in recent years.While the Commercial Banking revenues have grown 21% over the last 4 years, it is expected to report marginal growth in 2020 due to lower net interest margin on commercial loans.Further, Asset & Wealth Management business, which has increased by 19% over 2016-2019, would report a 2% decline in revenues for 2020 mainly driven by lower fees as % of total client assets and a drop in net interest margin on segment loans.
#3. Deriving JPMorgan's EPS Figure: The EPS figure has increased 73% from $6.19 in 2016 to $10.72 in 2019, and is expected to further grow by 2% to $10.89 by 2020.
This growth would be driven by a steady decline in Shares Outstanding, partially offset by lower adjusted net income.
Adjusted EPS [=A/B]
Adjusted Net Income [B]
shares outstanding [B]
JPMorgan has regularly invested in share repurchase to boost shareholder returns. Its share repurchase program is likely to touch $19.3 billion for the full year 2020.
Related Analysis
Our complete set of analyses on JPMorgan
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