JPMorgan Chase & Co. (JPM - Analyst Report) , the largest U.S. bank in terms of market capitalization, has been witnessing downward estimate revisions for quite some time now. Over the past 90 days, the Zacks Consensus Estimate for the current quarter has revised 4.9% downward, while it is down nearly 1% for this year. Also, the estimate for 2017 declined 2.9% over the same time frame.
Further, JPMorgan’s current year earnings are projected to decline 1.2% as against the projected earnings growth of 7.22% for the S&P 500. In addition, the stock looks a bit overvalued with respect to its PEG ratio. It currently trades at a PEG ratio of 1.96, compared with the industry average of 1.90.
Moreover, in addition the pressure on net interest margin due to the low-rate environment, limited fee income growth is expected to keep JPMorgan’s revenue growth challenged. Though the company projects interest income to rise in 2016 (mainly driven by loan growth and lower re-pricing), we believe margin will remain under pressure unless there is significant improvement in the rate environment.
JPMorgan currently carries a Zacks Rank #3 (Hold) and a VGM Score of F. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential. So, the stock at present does not look promising.
Picking the Right Stocks
While JPMorgan doesn’t appear to be an attractive choice at present, there are a few other bank stocks that have a better Zacks Rank and VGM score.
With the help of the Zacks Stock Screener, we have zeroed in on three bank stocks with a VGM Score of A or B and a Zacks Rank #1 or #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Manitowoc, WI, County Bancorp, Inc. (ICBK - Snapshot Report) provides a range of banking and related financial services to individuals, businesses and industries, primarily in Wisconsin. The stock has a VGM Score of B. Further, this Zacks Rank #1 stock has been witnessing upward estimate revisions for the current year over the last 60 days. The Zacks Consensus Estimate for 2016 has revised 15.6% up over the same period.
Heartland Financial USA, Inc. (HTLF - Snapshot Report) , headquartered in Dubuque, IA, is a multi-bank holding company, providing banking services to individuals and businesses in the U.S. The stock has a VGM Score of B. Further over the last 60 days, this Zacks Rank #2 stock has been witnessing upward estimate revisions for 2016, which inched up nearly 1%.
Based in San Diego, CA, BofI Holding, Inc. (BOFI - Snapshot Report) provides consumer and business banking products in the U.S. The stock has a VGM Score of B. The Zacks Consensus Estimate for 2016 for this Zacks Rank #2 stock has been witnessing upward estimate revisions over the last 60 days. The estimate for 2016 has increased by a penny.
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