JPMorgan Chase & Co. (NYSE:JPM) came out with its yearly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Results look mixed – while revenue fell marginally short of analyst estimates at US$110b, statutory earnings were in line with expectations, at US$10.72 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from JPMorgan Chase’s eleven analysts is for revenues of US$117.6b in 2020, which would reflect a satisfactory 6.9% increase on its sales over the past 12 months. Statutory per share are forecast to be US$10.81, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$115.6b and earnings per share (EPS) of US$10.59 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$138, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic JPMorgan Chase analyst has a price target of US$170 per share, while the most pessimistic values it at US$85.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It’s clear from the latest estimates that JPMorgan Chase’s rate of growth is expected to accelerate meaningfully, with forecast 6.9% revenue growth noticeably faster than its historical growth of 4.2%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect JPMorgan Chase to grow faster than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards JPMorgan Chase following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on JPMorgan Chase. Long-term earnings power is much more important than next year’s profits. We have forecasts for JPMorgan Chase going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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