J.P. Morgan didn't deliver what anyone would consider a great fourth-quarter. Yet there wasn't too much wrong with it either.
Early Tuesday, the banking giant said earnings fell 7.3%, hurt by legal costs and weaker investment banking revenue.
JPMorgan (ticker: JPM) earned $5.28 billion, or $1.30 a share compared to $5.69 billion, or $1.39 a share during the same period last year. Excluding special items, earnings totaled $1.40 a share. Revenue dropped 1.1% to $24.11 billion.
Still, J.P. Morgan topped Street estimates of $1.35 a share in earnings and revenue of $23.67 billion.
The Street's response was muted. On an up day for stocks, JPMorgan edged up 0.1% to $57.76 in afternoon trading after having earlier climbed as high as $58.58.
The results close the book on a challenging year for JPMorgan and its besieged CEO Jamie Dimon. However, even with its tangle of troubles, JPMorgan remains an earnings machine that can drive attractive returns.
And at 9.9 times forward earnings and 1.1 times book value, the price is right.
Robert Ewing, co-head of U.S. Equities at Putnam Investments, told Barron's in an interview published Saturday (see "Finding Value in JPMorgan, BofA and Shell," Jan. 11) that JPMorgan is one of the cheapest of the big banks. "The probabilities are quite high that the negatives have peaked and will slowly recede, and the franchise is performing better than all of the other big banks," he said.
Granted, JPMorgan remains a big target for regulators at a time when the financial industry is facing heightened scrutiny. In 2013, the company agreed to pay some $20 billion in legal settlements, with $850 million in the fourth quarter stemming from its failure to report suspicions of fraud by Ponzi-schemer Bernard Madoff.
Dimon, who himself is under attack from critics, told reporters on a conference call that some probes are only just starting.
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JP Morgan is quite in a bad state, things are going on a wrong pace and its hard to predict how things will be improved.
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