Stock of the day 10/07/2015 – JPMorgan Chase & Co/Bank of America Corp/Citigroup Inc

The second quarter earnings season fully gets underway next week, and the mega-US banks are first up for analysis.

Banking stocks have had a tumultuous time of it in the past few weeks, or months even, due to the ongoing Greek saga, and the strain the country’s banks are under, causing ripples of fear throughout the entire sector. There will also be the issue of the stronger dollar; likely to be less present than in the first quarter, or even 2014’s fourth quarter, be still a factor to be wary of going into this earnings season.

With that in mind, we first turn our attention to JPMorgan Chase & Co, which announces its Q2 2015 results on Tuesday. Compared to some other banks, like Bank of America, JPMorgan has had a successful year; the sector-wide tumble in the middle of January, which took the bank from a 2015 open of $62.63 to $54.28, was swiftly overturned. Since then (bar an end of March wobble) JPMorgan has been far more robust in its gains, climbing to a 15 year high of $69.82 on June 23rd. However the aforementioned Greek banking worries, and the overall negative trading that has blighted the global indices, has taken JPMorgan Chase & Co to a current trading price of $66.13 (IT-Finance.com, 10/07/2015).


(Source: IT-Finance.com 10/07/2015)

JPMorgan’s start of July losses have been exacerbated by the settlement of a claim that the company participated in illegal debt collection activities, costing the bank $166 million to get the case to go away with a further $50 million going back to customers through refunds. In terms of its Q2 performance, analysts are expecting a fall in EPS from $1.61 to $1.45 countered by a 0.8% increase in year-on-year revenue to $24.5 billion. JPMorgan Chase & Co has a consensus rating of ‘buy’ with an average target price of $69.57.

Wednesday then sees a Q2 2015 earnings release from Bank of America. The company has followed much of the similar pattern as JPMorgan, but crucially hasn’t managed to recover as well from the mid-January lows. It slumped to $14.98 in the middle of that month after opening the year at $18, and whilst it hasn’t been able to recover all of those early losses, by the end of April the stock had its groove back, rising to a high of $17.72 on the same day as JPMorgan’s high, June 23rd. However, the same bearish trading atmosphere that has plagued JPMorgan in July effected Bank of America, causing a fall to the current trading price of $16.49 (IT-Finance.com, 10/07/2015).


(Source: IT-Finance.com 10/07/2015)

Loan loss provisions and managing costs, both of which were troublesome in the first quarter, will be of interest to investors, as will, of course, the bank’s headline figures. Its earnings per share is expecting to rise quarter-on-quarter from $0.30 to $0.36; however this still reflects a 13.6% decline in year-on-year EPS. Similarly, revenue is expected to see a year-on-year decline of 1.5% to $21.3 billion but could come in lower than expected, as has been the trend for the past 3 quarters. Bank of America has a consensus rating of ‘buy’ with an average target price of $18.55.

Finally on Thursday Citigroup Inc, which was just named ‘Best Global Bank’ by Euromoney, announces its own second quarter results. An overall positive 2014 has given way to similar scenes in 2015; after sinking to $46.65 in the middle of January form a yearly opening price of $54.57, the stock recovered across February and March to reach $54 once more. A wobble towards the end of March ate into this price, but following its first quarter results in mid-April Citigroup has been much more steady, rising to a 7 and a half year high of $57.64 by June 23rd. Yet Citi hasn’t been immune to the problems that have affected its banking rivals, taking the stock back down to a current trading price of $53.72 (IT-Finance.com, 10/07/2015).


(Source: IT-Finance.com 10/07/2015)

With reports claiming that the bank is testing its own Bitcoin, puntastically named Citicoin, investors will likely be keen to know what Citigroup’s intentions are for the digital currency. Elsewhere earnings per share for the quarter is expecting to be $1.35 compared to the better than expected $1.52 from Q1, alongside a 3% quarter-on-quarter, and 2% year-on-year, decline in revenue to $19.1 billion. Citigroup has a consensus rating of ‘buy’ with an average target price of $62.42.