JPMorgan's Earnings Suggest Economic Improvements

By Kapitall | April 17, 2012 AAA

Written by Danny Guttridge


JPMorgan (NYSE:JPM) released their first quarter earnings, showing that they had recovered from a poor fourth quarter in 2011. The easing of fears about the European debt crisis gave investors and companies more confidence to return to fixed-income and equities markets, according to Reuters.

Terril & Co.'s Joe Terril said in response to their 24% jump in revenue from the previous quarter, "It tells me there's more economic activity, maybe, than what we were previously thinking - more demand for credit, more demand for banking services, more business out there." Business for the financial giant is recovering, though their net income is still down 3% from the same quarter last year due to higher expenses.

Investors this week were not necessarily satisfied with the signs of a slowly improving economy and wanted to gauge its strength, while JPMorgan's numbers did some to reassure them. Their earnings results could put pressure and raise expectations for competitors like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Bank of America Corp. (NYSE:BAC) and Citigroup Inc. (NYSE:C), which will be reporting earnings next week.

Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:



Business Section: Investing Ideas
If Wall Street banks continue to show positive results from the first quarter, it could show further strength in the recovery of our economy. Below is a list of financial stocks that have returned over 20% year-to-date. Do you think they can keep running up?

List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. JPMorgan Chase & Co. (NYSE:JPM): Provides various financial services worldwide. Market cap at $165.17B. The stock has gained 31.74% year-to-date. TTM gross margin at 80.89% vs. industry average at 64.62%. TTM operating margin at 46.58% vs. industry average at 40.27%.TTM pretax margin at 24.13% vs. industry average at 18.47%

2. Discover Financial Services (NYSE:DFS): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $17.44B. The stock has gained 37.44% year-to-date. TTM gross margin at 50.94% vs. industry average at 34.59%. TTM operating margin at 49.89% vs. industry average at 31.63%.TTM pretax margin at 44.05% vs. industry average at 25.51%

3. SVB Financial Group (Nasdaq:SIVB): Operates as the bank and financial holding company that provides commercial banking and financial products and services. Market cap at $2.69B. The stock has gained 28.69% year-to-date. TTM gross margin at 95.23% vs. industry average at 72.51%. TTM operating margin at 54.24% vs. industry average at 39.97%.TTM pretax margin at 42.4% vs. industry average at 22.51%

4. Protective Life Corp. (NYSE:PL): And its subsidiaries engage in the production, distribution, and administration of insurance and investment products in the United States. Market cap at $2.52B. The stock has gained 25.14% year-to-date. TTM gross margin at 17.57% vs. industry average at 14.17%. TTM operating margin at 17.57% vs. industry average at 11.28%.TTM pretax margin at 14.42% vs. industry average at 8.58%

5. Symetra Financial Corporation (NYSE:SYA): Operates as a financial services company in the life insurance industry in the United States. Market cap at $1.30B. The stock has gained 21.31% year-to-date. TTM gross margin at 15.56% vs. industry average at 14.17%. TTM operating margin at 15.56% vs. industry average at 11.28%.TTM pretax margin at 13.96% vs. industry average at 8.58%

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Disclosure: Kapitall's Danny Guttridge does not own any of the shares mentioned above. Profitability data sourced from Fidelity.

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