Is JPMorgan Chase Well-Positioned for the Future?

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With shares of JPMorgan Chase & Co. (NYSE:JPM) trading around $57, is JPM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

JPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management, and private equity. Financial services companies like JPMorgan Chase are essential for well-functioning economies around the world.

JPMorgan Chase increased its target for annual net income to $27 billion and will cut 5,500 more mortgage and retail banking jobs than forecast as higher interest rates boost profits and curb demand for home loans. The lender can increase earnings from last year’s $18 billion as legal costs subside and higher rates increase interest income from loans and investments, the New York-based company said today in a slide presentation for its annual investor day. The bank said it would eliminate about 8,000 jobs in the consumer and mortgage-banking units this year — 5,500 more than it forecast a year ago — as demand for refinancings declines. The firm said it will hire in other areas.

While the profit target was higher than the $24 billion goal it set a year earlier, the biggest U.S. bank’s forecast for return on equity was little changed as it holds higher levels of capital in all of its divisions. JPMorgan said it expects $3.5 billion of net income by 2017 from expansions in businesses including middle-market lending and private banking. “We now have clarity on most of the regulatory rules, and we believe that we, more than others, will successfully adapt to the new financial architecture and will emerge where we started — with best in class margins and returns,” Chief Financial Officer Marianne Lake said at the investor conference.

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