JPMorgan (JPM - Free Report) , the biggest U.S. bank in terms of total assets, is well positioned to grow, driven by consistent rise in loan balance, higher interest rates, expansion of branch network in to newer areas and solid asset quality. Further, its impressive capital deployment plan reflects a strong balance sheet position.
Also, Warren Buffett-led Berkshire Hathaway’s (BRK.B - Free Report) investment in the company indicates strong prospects for long-term investors. However, a slowdown in mortgage banking operation and higher expense levels are major near-term concerns for JPMorgan.
Nonetheless, this Zacks Rank #2 (Buy) stock seems like an attractive investment opportunity right now as it has been witnessing solid upward estimate revisions and has decent price performance amid volatile markets.
Over the past 60 days, the Zacks Consensus Estimate for earnings has increased 1.4% for 2018 and 1.1% for 2019. Further, shares of JPMorgan have rallied 9.5% over the past year, significantly outperforming the industry’s increase of just 0.1%.
What Makes the Stock a Solid Choice?
Earnings growth: Over the past three to five years, JPMorgan witnessed earnings per share growth of 7.8%. Further, the company’s earnings are projected to grow 35.1% and 8.5% in 2018 and 2019, respectively.
Moreover, JPMorgan has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 3.9%.
The company’s long-term (three-five years) estimated EPS growth rate of 6.7% promises rewards for investors in the long run.
Revenue strength: JPMorgan continues to benefit from higher interest rates and loan growth. Further, its plan to open roughly 400 new branches in 15-20 new markets by the end of 2023 will provide additional support. Notably, the company has already made progress on this front, with announcements to open branches in Greater Washington area, Philadelphia, Florida, Georgia and New England region.
All these efforts are expected to further aid growth in revenues. The company’s sales growth is projected to be 10.1% for 2018 and 4.4% for 2019.
Encouraging Capital Deployment Plan: JPMorgan’s 2018 capital plan received the Federal Reserve’s approval. Following this, the bank raised its quarterly dividend to 80 cents per share in September 2018, up 42.9% from the prior payout. Moreover, the company has a share-repurchase program of up to $20.7 billion in place. These activities reflect its capital strength and commitment toward rewarding shareholders.
Superior ROE: JPMorgan’s Return on Equity (ROE) ratio is 13.90% compared with the industry average of 12.23%. This indicates that the company reinvests more efficiently compared to the industry.
Other Major Bank Stocks to Consider
Current-year earnings estimates for Citigroup (C - Free Report) have been revised 1.5% upward over the past 60 days. Further, the company’s shares have gained 10.9% over the past two years. Currently, it carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Bancorp’s (USB - Free Report) earnings estimates for 2018 have moved nearly 1% upward over the past 60 days. Further, over the past two years, the company’s shares have gained 8.8%. Currently, it carries a Zacks Rank of 2.
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