Today's Must Read
Loan Growth, Branch Expansion Efforts Support JPMorgan (JPM)
Growth in Loans Aid Bank of America (BAC), Legal Woes Linger
Friday, February 21, 2020
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Visa (V), JPMorgan Chase (JPM) and Bank of America (BAC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services industry over the past year (+45% vs. +43.2%). The Zacks analyst believes that shift in payments to new methods, such as mobile, cards, online and via wearables bodes well for the long haul. The acquisition of Visa Europe is a long-term growth strategy for the company.
Visa’s earnings of $1.46 per share matched the Zacks Consensus Estimate and were up 7.7% year over year. Results were driven by growth in payments volume, cross-border volume and processed transactions.
Numerous acquisitions and alliances plus technology upgrades and effective marketing paved the way for long-term growth and consistently increased revenues. However, high client incentives and expenses weigh on the operating margin. Also, adverse foreign exchange volatility imparts instability to the company’s earnings.
Shares of JPMorgan have gained +26.5% in the past six months against the Zacks Major Regional Banks’ rise of +20.4%. The Zacks analyst believes that decent loan demand, improving economy, the acquisition of InstaMed, new branch openings and focus on credit card business will continue to aid financials.
The bank has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. Improvement in non-interest income and lower provisions supported fourth-quarter 2019 results, while decline in net interest income was an undermining factor.
While the Fed’s accommodative policy, challenges in expanding mortgage operations and the company’s significant dependence on capital markets revenues make us apprehensive about top-line growth to some extent, enhanced capital deployment plan reflects strong balance sheet position and will enhance shareholder value.
Bank of America’s shares have gained +5% over the past three months against the Zacks Major Regional Banks’ rise of +0.3%. The Zacks analyst believes that opening branches in new regions, improved digital offerings, decent loan demand and efforts to control costs will aid profitability despite lower interest rates.
Bank of America has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. Improved capital markets performance and decent loan growth aided fourth-quarter 2019 results.
Efforts to focus more on consumer banking business have started bearing fruit. The company's enhanced capital deployment actions reflect a solid liquidity position. However, significant dependence on capital markets performance makes us apprehensive, given its cyclical nature. This is likely to hurt the company’s fee income growth, and in turn negatively affect the top line.
Other noteworthy reports we are featuring today include Citigroup (C), AstraZeneca (AZN) and Duke Energy (DUK).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>