Wednesday, 15 April 2015

JP Morgan and Wells Fargo - keep waiting

So a quick review of the two big US financial numbers that have come out in the last couple of days namely JP Morgan and Wells Fargo.

First JP Morgan.  My favourite chart from their presentation document was the outlook one.  10% core loan growth, simplification in the CIB unit but still dull mortgage banking growth (and credit card services revenue rate at the 'low end' albeit still a double digit growth rate).

Quite impressed by the growth in tangible book by JPM (+9%) and if you believe that 14% return on tangible capital employed then you could justify statically a US$63s share price...and maybe growth on top of that.  

I talked a quarter ago (link here) about waiting for the US$54 support level to trade back into the US$60s.  Keep up this trend - assisted by brokerage like the reasonably recent Goldman Sachs piece talking about a break-up - and sub US$60 for a run to the mid-US$60s may work.  

So how about Wells Fargo? At the link above regarding the company I noted that:

'Back in October - at the time of the Q3s - I observed that the share looked more interesting in the mid US$40s. With a US$32+ book value, a return on equity of around 13.5% and rolling the numbers on another year I would still hold this view.  On the chart the US$46 level is one to note'

So how about post this quarter?

Well it boringly remains about the same.  Looking at the key metrics what is striking is how relatively flat the data is...

...and unsurprisingly when I re-ran the numbers I came to similar conclusion as before: waiting for that US$46 level...

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