The London Whale losses were very troubling for JP Morgan Chase (JPM) investors. Nonetheless, the stock has gone up 31% in 2012 outperforming the S&P 500 by a great margin. Furthermore, JP Morgan recorded an impressive $21.3 billion in profits with revenues hitting almost $100 billion.
JP Morgan Chase Beats the S&P 500
Source: Daily Finance
Further analysis of JP Morgan stock
JPMorgan Chase's Q4 2012 earnings report beat sell-side analyst expectations. The bank recorded an EPS of 5.20 which means that at the current stock price of $47, the trailing earnings multiple is actually in single digits at just 9.03. It is always a good sign especially for value investors to see a stock trading at 9 times the coming year (2013) analyst estimates.
Moreover, the market cap of 176.73B makes it all the more attractive as a value investment idea when you compare the market cap to the book value of its equity, since this leads to an appealing Price to Book (P/B) ratio of 0.9.
JPM is trading as cheaply as Wells Fargo (WFC)
The bank comparables for JP Morgan are the Big 4 Banks – Citigroup (C), Bank of America (BAC), Wells Fargo and also Barclays PLC (BCS). Of these four, Wells Fargo is the best pick for a comparison analysis. Its P/B ratio of 1.3 shows it is trading at a premium to book value. This compares pretty well to JPM’s P/B ratio of 0.9. The problem is that, although JPM is a value investment, it appears that Wells Fargo might be an even better investment based on earnings.
A great sign: Hedge funds love the stock
JPM was featured as one of the ten most popular stocks in hedge fund holdings in Q3 2012 with 13F filings revealing 83 funds holding a position. It was also listed as one of the top ten banking stocks for investors.
Billionaire Ken Fisher is bullish about the stock with his Fisher Asset Management doubling its JPM stock holdings during Q3 2012 with an estimated 13 million shares as of last September.[related2][/related2]