JPM reports next week; don’t extrapolate 40% profit growth
I expect JPM stock to remain choppy next Monday. The recent rebound hasn’t broken out of the range it’s been in since October, and Tuesday’s earnings are more likely to change the trend. Last quarter’s 40% profit growth was impressive, but it included sizable investment gains, so don’t simply expect the same next quarter.
Since October, JPM has generally traded between $325 and $335, closing Friday at $332.99. It rose for two straight days on Thursday and Friday, but still hasn’t surpassed its recent high. I’d view this as a rebound within the trading range. If it breaks above around $335 on heavy volume Monday and holds there, buying would be stronger than I expected, and I’d have to revise my view that the stock will continue moving sideways.
Net income rose 41% year over year in the second quarter. Excluding significant items, the company’s growth was 13%. These items included gains related to Visa shares and other equity investments. Those gains were real, but they aren’t the kind of profit you can expect to repeat every quarter. Growth of 13% is still decent; it just doesn’t match the expectations created by 40% growth.
Excluding financial markets trading, net interest income rose 4% year over year. The company said growth in deposits and loans helped, while lower interest rates offset some of that benefit. Net interest income is the interest a bank collects minus the interest it pays. Rate changes affect both sides, so you can’t assume a bank will necessarily make more money just because rates are falling.
JPM will release its third-quarter earnings around 7 p.m. Beijing time on October 13. I’ll be watching to see whether net interest income continues to grow and whether credit losses worsen. If the former keeps growing and the latter doesn’t deteriorate, I’ll be more inclined to expect the stock to rise after the report. If day-to-day business slows and investment gains are the only thing making total profits look good, I’d worry about the stock pulling back. These are the conditions I’ll be looking for in the report; third-quarter results aren’t out yet.
Of course, last quarter’s strong earnings were good news. This time, I’d rather see the loan, deposit, and fee businesses continue to generate profits—not just a pretty-looking headline profit figure.
#JPM #美股 #Earnings
I expect JPM stock to remain choppy next Monday. The recent rebound hasn’t broken out of the range it’s been in since October, and Tuesday’s earnings are more likely to change the trend. Last quarter’s 40% profit growth was impressive, but it included sizable investment gains, so don’t simply expect the same next quarter.
Since October, JPM has generally traded between $325 and $335, closing Friday at $332.99. It rose for two straight days on Thursday and Friday, but still hasn’t surpassed its recent high. I’d view this as a rebound within the trading range. If it breaks above around $335 on heavy volume Monday and holds there, buying would be stronger than I expected, and I’d have to revise my view that the stock will continue moving sideways.
Net income rose 41% year over year in the second quarter. Excluding significant items, the company’s growth was 13%. These items included gains related to Visa shares and other equity investments. Those gains were real, but they aren’t the kind of profit you can expect to repeat every quarter. Growth of 13% is still decent; it just doesn’t match the expectations created by 40% growth.
Excluding financial markets trading, net interest income rose 4% year over year. The company said growth in deposits and loans helped, while lower interest rates offset some of that benefit. Net interest income is the interest a bank collects minus the interest it pays. Rate changes affect both sides, so you can’t assume a bank will necessarily make more money just because rates are falling.
JPM will release its third-quarter earnings around 7 p.m. Beijing time on October 13. I’ll be watching to see whether net interest income continues to grow and whether credit losses worsen. If the former keeps growing and the latter doesn’t deteriorate, I’ll be more inclined to expect the stock to rise after the report. If day-to-day business slows and investment gains are the only thing making total profits look good, I’d worry about the stock pulling back. These are the conditions I’ll be looking for in the report; third-quarter results aren’t out yet.
Of course, last quarter’s strong earnings were good news. This time, I’d rather see the loan, deposit, and fee businesses continue to generate profits—not just a pretty-looking headline profit figure.
#JPM #美股 #Earnings