JPMorgan (NYSE: JPM) stock has been performing well, with a YTD gain of 21% compared to the S&P 500 index’s 17% rise. Its peer, Citigroup (NYSE: C), has also seen a 22% increase YTD. The bank is scheduled to report its fiscal Q2 2024 results on July 12, 2024, with expectations of mixed results, anticipating earnings to exceed consensus but revenues to slightly miss expectations. The bank had outperformed in the previous quarter, with revenues increasing by 9% year-over-year to $41.9 billion, primarily driven by an 11% increase in net interest income, which contributes around 60% of the top line. The NII is expected to continue driving results in Q2.
JPMorgan stock has seen strong gains of 70% from early January 2021 to the present, outperforming the S&P 500 by about 20%. Over the last three years, the stock has consistently outperformed the broader market, with returns of 28% in 2021, -13% in 2022, and 28% in 2023. In comparison, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023. JPMorgan has been able to outperform other heavyweights in the Financials sector and even megacap stars like GOOG, TSLA, and MSFT, which have struggled to beat the S&P 500 consistently. The Trefis High Quality Portfolio, with 30 stocks, has also outperformed the index each year over the same period, providing better returns with less risk.
JPMorgan’s revenues are forecasted to fall slightly below the consensus estimate, with revenues growing 23% year-over-year to $158.1 billion in FY2023, driven by a 34% increase in net interest income and an 11% rise in noninterest income. The NII saw benefits from an acquisition, higher net interest margin, and increased revolving balances in card services in 2023, with momentum continuing into Q1 of 2024. Noninterest income also grew in both 2023 and Q1 2024, with expectations of this trend continuing into Q2. Trefis estimates JPMorgan’s Q2 2024 revenues to be around $42.54 billion, slightly below the consensus estimate of $42.87 billion.
Earnings per share (EPS) for JPMorgan in Q2 2024 are projected to exceed consensus estimates, with an expected adjusted EPS of $4.31, 1% above the consensus estimate of $4.26. The bank reported a 32% increase in adjusted net income to $49.6 billion in 2023, primarily due to revenue growth. However, the bottom line only saw a 6% year-over-year increase to $13.4 billion in Q1 2024, attributed to a rise in total noninterest expenses. It is expected that the net income margin will improve in Q2, with an annual GAAP EPS of $16.42 forecasted for the full year 2024.
Based on an EPS estimate of $16.42 and a P/E multiple of close to 13x in fiscal 2024, Trefis has arrived at a valuation of $208 per share for JPMorgan, slightly above the current market price of around $205. The analysis takes into account the share price at the end of the year and reported or expected adjusted earnings for the full year. Overall, despite the current uncertain macroeconomic environment with high oil prices and elevated interest rates, JPMorgan is expected to continue its strong performance and deliver positive results in the upcoming earnings report.
