The Soundest Bank Play
JPMorgan Chase (JPM) stock plunged earlier this year when the "London Whale" losses broke into the news, but at this point it has recovered somewhat. The stock is now up about 30% from its lows in early June and has gained 18% on the year, with a recent bounce on strong third-quarter numbers. JPMorgan's revenue climbed 6% to $26 billion, and the comparison was even better on a sequential basis. According to the company, poorer results at the investment bank vs. last year were offset by higher net revenues in commercial banking. Net income was substantially higher, as well, and earnings of $1.40 per share represented a 37% climb from $1.02 a year earlier.
Even post-recovery, JPMorgan stock trades at a discount to the book value of its equity. The current price-to-book ratio is 0.8x, signifying that investors are skeptical of the bank's internal valuations. The earnings multiples should also look attractive to a value investor: JPMorgan trades at trailing and forward price-to-earnings multiples of 9x and 8x, respectively. The company also pays a dividend yield of 2.8%. That's not enough for consideration purely on an income basis, but this is certainly a plus alongside a very attractive valuation profile....513 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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