JPMorgan Chase Preview: What's in the Bank?
JPMORGAN CHASE (JPM)
One of the largest banks in the U.S. Proud new owner of Bear Stearns and Washington Mutual. Dow Component.
Reports Q3 earnings Wednesday 10/15 at 700a ET. Conference call at 900a ET.
WHAT WILL MOVE THE STOCK:
IT MAY NOT BE EPS - Saying that the earnings outlook for financials is cloudy is a rather large understatement. Between the crisis in the credit markets and Washington's effort to fix said crisis, it's become extremely difficult to forecast profits (or losses). Estimates for JPMorgan Chase's Q3 EPS range from a loss of 70 cents all the way up to a gain of 42 cents. Over the last 30 tumultuous days, the consensus forecast has sunk from a gain of 37 cents to a loss of 21 cents. So see what revenues and income numbers tell you about JPMorgan's operational health while also keeping an eye on...
INTEGRATION - This is the profit light at the end of the credit crisis tunnel. JPMorgan used its strong balance sheet to "save" both Washington Mutual and Bear Stearns. How is the merging coming along? Any updates on loan write-downs or costs and benefits of the integration?
LOAN LOSSES? - Mortgages, we know about. But are there additional losses on the investment banking portfolio? Is it time to start worrying about credit cards? Is JPMorgan going to report more new losses on its loan portfolio? If so, how large is the hit and how much money has been added to reserves to cover potential losses?
LOAN ACTIVITY - Banks have supposedly stopped lending. What is JPMorgan doing? What specifics will the JPMorgan give us on lending volume and outlook for lending?
HOW DOES THIS WORK? - What does the government capital injection mean for how JPMorgan will operate, loan money and, of course, make money? This point is very important ($25 billion important), however the likelihood of getting a substantial answer on Wednesday ain't that good.
Q3 EPS falls to a loss of $0.21 from a gain of $0.97, revenues down 1% to $16.005 billion
Q4 EPS down 29% to $0.61, revenues up 19% to $20.655 billion
FY 08 EPS down 62% to $1.66, revenues up 2% to $72.615 billion
Source: Thomson Reuters
Year-ago actuals: Q3 EPS $0.97, revenues $16.112 billion
*All estimates are current as of 10/14 and subject to change.*
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