Tag Archives: Wells Fargo

JPMorgan Chase & Co will report earnings while we are entering a rate-cutting cycle

The banks are in focus this week as they will report earnings with JPMorgan Chase coming out with their report Tuesday morning before the open. JPMorgan has outperformed its peers and their growth has been 18% per year last three years.

Last two years, JPMorgan Chase has beaten Earnings Per Share estimates 100% of the time. They have also beaten revenue estimates 100% of the time.

Analysts expect JPMorgan to earn $2,50 per share in the second quarter on revenue of $28,91 billion. JPMorgan earned $2,22 in the second quarter last year.

JPMorgan is different from Well Fargo which is also reporting earnings on Tuesday. JPMorgan Chase has moved up over 10% over the past year while Wells Fargo has faced a lot of obstacles, inkluding lack of their own CEO.

The banking industry is scary to me at the moment, and the most dangerous bank in the world is in Europe. Dutche Bank has been a desaster for a long time and the company are on the edge. A collapse could send the whole world in a negative trend.

We are also entering a rate-cutting cycle which is not good for the banks either. The margins will shrink and the earnings will decline while the rates are falling and the spread between the rates on loans and the rates paid out on deposits shrinks.

Morgan Stanley and Citi both downgraded the industry as a whole because of this development with rates, but JPMorgan is still a favorite.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Tesla up 384,9%

The numbers from J.P. Morgan is important because it is a significant indicator of the fundamental performance by the key banking sector. J.P Morgan has exposure in many banking businesses. J.P Morgan reported an earnings per share of $1,30. That`s below the consensus of $1,31.

Wells Fargo was also better than expected. They earned $1 per share i Q4 last year. That`s also a little bit above consensus of $0,98. Total loan and deposits grew and a strong capital position and returns on assets and equity was positive reports. Great!

Yesterdays reports was not that surprising. J.P Morgan and Wells Fargo are the strongest banking institutions. All the positive readings about the retail points out all the positive revisions to Q4 GDP estimates. That`s why the news about non-farm payrolls gave some people headache.

Tesla shares rose 15,7% yesterday after a strong report. The same company is up 384,9% last 12 months. Vice president of sales, Jerome Guillen, said they delivered 6,900 Model S electric sedans in Q4 last year, and that is up 20% since Q3 last year. Wow! Detroit is back!

General Motors Co will start to pay quarterly dividend this March and this is the first time they have paid a dividend to shareholders since May 2008. The payout will cost GM about $1,67 billion a year. Dividend per share will be 30 cents on its common stocks.

The January effect this year have been two different asset classes. In December last year, investors wrote off long-term treasury bonds and gold bullion as lost. You all know about the declining gold prices in 2013. Falling gold prices and improving economic data led to more money into the stock market.

The iShares 20+ Year Treasury Bond ETF (TLT) was down -13,91% last year, while the SPDR Gold shares ETF (GLD) was down -28,33% in 2013. Both seems to have moved up so far in 2014. One of the key factors that the Fed members are watching to determine how fast they will start to taper is the Treasury bonds that have disappointed in the last payrolls data we all got. It is in conflict with the case for a better job outlook.

Bank of America Corporation (BAC) will release its Q4 reports today. The consensus earnings per share forecast is $0,27. That is up 800% since Q4 last year!

News today: PPI & Empire State Manufacturing at 8:30am, Crude Oil Inventories at 10:30am, Beige Book at 2:00pm.

TSLA 15.01.2014

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Price to earnings 2

Margin of safety is very important. It seems to be like that the human psychology is apt to go too far sometimes and it can all end up to throw rational valuation out of the window.

You know that price-to-earnings for Facebook is 12, and 13 for Twitter, and if you are paying more than 15 times the earnings for a company, you need to seriously examine the underlying assumptions you have for the companies profit in the future, and its intrinsic value.

I have seen many stocks trading with much more than 12 and 13x earnings, and if you have bought some of them at that price you would have crushed other investments because the underlying prifits did live up to Wall Streets expectations.

But who is investing in a risky business if they don`t know the business they are in? Do you feel confortable if you have all your money in a risky stock like that if you don`t know the demand, competitors, future drivers and the commodity nature of their product? The company can be wiped out, so does your money, but probably not.

The ideal situation is when you get a great business out of your investments and generates huge amount of money with little capital investments. Sometimes you get a huge profit at a steep discount to intrinsic value. How about Wells Fargo, trading at 5x earnings during the real estate crash 23 year ago?

You have to predict the future and try to imagine how the future will be for the company. How is it today, tomorrow, next year and how does it look in 10 years? Is this business going to grow? Will it be a huge demand for their products? Are they competetive? What about their earnings and profit in the future? Is there any threats?

I know a great company. They are selling cd`s and vinyl records. Everybody knows about the company and the price is low. Are you willing to buy shares in this company? Of course not. Selling vinyl and cd`s is not the future and you know that. The future is streaming and broadband. That is where you are going to spend your money.

It is wise to require a much larger margin of safety before you buy some shares in enterprises. The right definition of ‘Price-Earnings Ratio – P/E Ratio is; A valuation ratio of a company’s current share price compared to its per-share earnings. It is calculated like this:

Let`s say company A is currently trading at $50 a share and earnings (EPS) over the last 12 months were $1,95 per share. Then the P/E ratio for the stock should be 25,6. ($50/$1,95). That`s it. Remember that the average market P/E ratio is 20 – 25 times earnings.

EPS (earnings per share) is taken from the last four quarters (trailing P/E). Sometimes the numbers is taken from the estimates for the next four quarters (projected or forward P/E). Other use the last two actual quarters and the estimates of the next two quarters. Often known as “price multiple” or “earnings multiple”.

It will be wrong to compare price-to-earnings in a technology company (high P/E) to a utility company (usually low P/E) as they have a different growth prospects. P/E tells us how much investors are willing to pay per dollar of earnings. P/E for Facebook is 12, which means that the investors is willing to pay $12 for $1 of current earnings.

Avoid basing a decision on this measure alone, because this numbers is usually not enough. the earnings is based on an accounting measure of earnings that is susceptible to forms of manipulation. It makes the quality of the P/E only as good as the quality of the underlying earnings number. Keep in mind that companies that are losing money do not have a P/E ratio.

News today: Trade Balance & Unemployment Claims at 8:30am, Fed Chairperson Yellen Testifies at 10:00am, 30 Year Auction at 1:01pm.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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