JPMorgan earnings lifted by tax benefits

Companies are beginning to report third quarter earnings after a summer impacted by economic uncertainty in Asia.

JPMorgan Chase & Co. has a one year low of $50.07 and a one year high of $70.61. (NYSE:JPM) on weakness during trading on Monday, ARN reports. The shares are however, marginally negative as compared to the S&P 500 for the past week with a loss of 1.37%.

The downfall in estimates can be linked to low-investment banking fees and stagnant margins, resulting in the Federal Reserve (Fed)’s decision to keep rates flat. This translates into $5.18 billion profit for JPM giving the stock a 11.05 P/E. Of course only in case the $1.40 EPS is accurate. The 24-company KBW Bank Index tumbled 9.5 percent in the third quarter, worse than the 6.9 percent drop for the broader S&P 500 Index.

Another analyst, Steven Chubak of Nomura, reckons that the bank’s moves could lift its share price by $2 a share. During last six month period, the net percent change held by insiders has seen a change of -15.86%.

In other JPMorgan Chase & Co. news, General Counsel Stephen M. Cutler sold 5,376 shares of the company’s stock in a transaction that occurred on Wednesday, July 15th. J P Morgan Chase & Co (NYSE:JPM) has underperformed the index by 3.65% in the last 4 weeks. The company has a market cap of $228,245 million and the number of outstanding shares have been calculated to be 3,698,067,000 shares.

The Gross Profit Margin (GPM) for JPMorgan is significantly high at 89.22%.

Ahead of the earnings release, of 39 sell-side analysts covering JPM; 29 recommend a Buy and 10 suggest a hold. The $74.32 average target is 19.99% above today’s ($61.94) stock price.

The bank was expected to generate between $23.26 billion and $24.61 billion in revenues, according to Bloomberg, making for an average target of $24.04 billion.

On a net basis, including $2.2 billion in tax benefits and a $1 billion firm-wide legal expense, net income climbed 22% to $6.8 billion, the bank reported. The estimate for the 3Q is $1.377, which is an increase of 0.4% compared to the actual EPS of 2Q.

“The third quarter is typically a seasonally slow quarter, but we believe that the third quarter was even slower than a normal third quarter, and the increased volatility in the quarter froze capital markets activity”, KBW analyst Chris Mutascio wrote in an earnings preview. The shares saw a net money flow of $(-6.62) million and the up/down ratio stood at 0.58.

The bank said net income fell in its commercial banking, asset management, and corporate and investment banking businesses.

The consumer segment is the largest contributor to net revenues. Thus, the factors affecting the industry at large won’t affect JPMorgan as much.