Citigroup Inc (C), Goldman Sachs Group, Inc. (GS) & JPMorgan Chase & Co. (JPM): Banks Have Their Eyes Set on the Future

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This Wall Street whale continues to be a great bank
With a 2.8% cash dividend yield and trading at 1.4 times tangible book value per share and 8.5 times P/E, I think JPMorgan Chase & Co. (NYSE:JPM) is a good combination of quality and fair valuation. Once again, JPMorgan Chase & Co. (NYSE:JPM) surprised the market favorably with its EPS coming at $1.60 versus street’s consensus of $1.44. Those better than expected earning figures were a result of the Investment Banking division and better credit quality and reserve release.
That said, expenses (at $450 million) came as the one single relevant disappointment since they were materially higher than the market expected. Nevertheless, the bank clearly is a long term out-performer. In spite of headwinds (such as the London Whale), doubts and regulatory harassment, JPMorgan Chase & Co. (NYSE:JPM) still remains the world’s premier global bank in terms of capital strength and, with Returns On Tangible Equity at 16% also leads most of its peers on profitability.

Foolish bottom line

As I said at the beginning of the article, U.S. banking results are tightly tied to the country’s economic performance. When the economy expands and jobs are created, banks make more money. I think we are starting to see the next phase of a journey that started at the burst of the real estate bubble back in 2008. Apparently, its about time to be long banks!

The article Banks Have Their Eyes Set on the Future originally appeared on Fool.com and is written by Federico Zaldua.

Federico Zaldua has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs Group, Inc. (NYSE:GS). The Motley Fool owns shares of Citigroup Inc (NYSE:C) and JPMorgan Chase & Co. (NYSE:JPM). Federico is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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