JPMorgan Stock To Top The Estimates In Q4?

-2.31%
Downside
141
Market
138
Trefis
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JPM
JP Morgan Chase

JPMorgan (NYSE: JPM) is scheduled to report its fiscal Q4 2022 results on Friday, January 13, 2023. We expect JPMorgan to beat the consensus estimates for revenues and earnings. The bank surpassed expectations in the last quarter, with revenues increasing 10% y-o-y to $32.7 billion. It was driven by growth in consumer & community banking, commercial banking, and asset & wealth management businesses. On the flip side, the corporate & investment bank segment reported a year-on-year decline due to lower investment banking and equity trading revenues. We expect the same trend to continue in the fourth quarter. 

Our forecast indicates that JPMorgan’s valuation is $138 per share, which is just below the current market price of around $139. Our interactive dashboard analysis on JPMorgan’s Earnings Preview has more details. 

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(1) Revenues expected to top the consensus estimates

JPMorgan’s revenues grew 2% y-o-y to $94.15 billion in the first three quarters of 2022. It was mainly due to a 20% jump in net interest income (NII), partially offset by an 11% decrease in non-interest revenues. 

  • The bank generates close to 50% of the total revenues from NII, which suffered in 2020 and 2021 due to interest rate headwinds. However, the Fed started the rate hike process in 2022. Notably, it has increased the benchmark interest rates seven times in the year. The improvement in the interest rates has benefited the net interest income of the lenders, including JPMorgan (up 20% y-o-y). We expect the Q4 results to be on similar lines.
  • The noninterest revenues suffered in the first nine months of 2022, primarily due to a decrease in investment banking fees, investment securities losses, and card income. We expect the same trend to continue in the fourth quarter.
  • Overall, we estimate JPMorgan’s revenues to remain around $128.9 billion for the full year FY2022.

Trefis estimates JPMorgan’s fiscal Q4 2022 revenues to be around $34.77 billion, marginally above the $34.31 billion consensus estimate. 

2) EPS is likely to beat the consensus estimates

JPMorgan Q4 2022 adjusted earnings per share (EPS) is expected to be $3.22 per Trefis analysis, almost 4% above the consensus estimate of $3.09. The bank reported a 31% y-o-y fall in the adjusted net income to $25.3 billion in the first nine months of 2022. It was because of a significant build-up in provisions for credit losses from -$7.97 billion to $4.10 billion. We expect the same trend to continue in Q4. Overall, JPMorgan is likely to report an annual GAAP EPS of $11.73 for the full-year 2022. 

(3) Stock price estimate is just below the current market price

We arrive at JPMorgan’s valuation, using an EPS estimate of around $11.73 and a P/E multiple of close to 12x in fiscal 2022. This translates into a price of $138, which is 1% less than the current market price of close to $139. 

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year 

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 JPM Return 3% 3% 61%
 S&P 500 Return 2% 2% 75%
 Trefis Multi-Strategy Portfolio 5% 5% 229%

[1] Month-to-date and year-to-date as of 1/11/2023
[2] Cumulative total returns since the end of 2016

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