It may not be thought of as a growth stock, but JPMorgan Chase, today's selection for IBD 50 Stocks to Watch, has shown strong sales and earnings growth in the two most recent quarters.
Second-quarter sales of $41.3 billion grew 34%, while earnings per share of $4.37 increased 58% from the prior year. EPS climbed 17% and 37% the previous two quarters, while revenue growth accelerated 1%, 10%, 18% and 25% prior to the Q2 results. No wonder it's earned a spot in the IBD 50.
For the full year, Wall Street estimates earnings growth of 30%, to $15.69 per share.
Consumer banking surged in Q2, with net income growing 71% for the segment. The bank's purchase of First Republic's assets during the quarter added to gains.
An increase in average loans made up for a fall in average deposits during the second quarter. But higher deposit margins on lower balances also helped net revenue increase in the banking and wealth management segment. Investment banking revenue rose while revenue from markets and securities services fell.
The company has scheduled its conference call for the third quarter on Oct. 13.
Growth Stock Rises After Q2 Results, First Republic Rescue
The stock formed a four-weeks-tight pattern with a buy point of 159.38.
Shares rebounded from the 50-day moving average a day ahead of the Federal Reserve's Comprehensive Capital Analysis and Review on June 30, according to IBD MarketSmith. Higher-than-average volume accompanied further gains in mid-July after second-quarter earnings were announced.
The stock has been trading steadily above its 50-day line since its June breakout, when the company bought a majority of First Republic's assets. The purchase included $173 billion in loans and $30 billion in securities. JPMorgan estimated a one-time gain of $2.6 billion and a $2 billion cost spread over 2023 and 2024 due to the purchase.
JPM has a gain of 15% for the year so far, or 1.5% lower than the S&P 500. But it's gain is more than double the 6% gain of the Dow Jones Industrial Average, of which JPMorgan is a component.
As of March, the company had over $3 trillion in assets. JPMorgan operates different segments including investment banking, financial services for consumers and businesses, commercial banking, asset management and financial transactions processing.
The company leads IBD's money center banks industry group in the IBD Stock Checkup.
Mutual funds have been buying the stock over the past five quarters. Institutions own 37% of shares outstanding, while the Accumulation/Distribution Rating of A- shows strong support from fund managers. The Fidelity Contrafund (FCNTX) holds shares of JPM.
Exchange traded funds holding the new growth stock include iShares U.S. Financial Services ETF and the First Trust Nasdaq Bank ETF.
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