Two things seem to dominate sentiment around the larger banks these days – the prospect for higher near-term capital returns and the bank’s near-term operating leverage. JPMorgan (JPM) has decided to go its own way, though, with management choosing to increase discretionary spending by billions in the effort to build up the company’s future growth prospects across the business.
With a sharp negative reaction after JPMorgan’s cost guidance during the earnings conference call, these shares have lagged larger banks by more than 15% since my last write-up. While I understand the short-term sentiment shift, as JPMorgan isn’t going to be an earnings growth or ROTCE leader in the near term, I think that overlooks the long-term benefits to increased share in the retail and commercial businesses. With a prospective long-term return back in the double-digits, I think JPMorgan is an excellent idea for investors who want a quality bank, but can also afford some near-term underperformance risk.
Read the full article at Seeking Alpha:
No comments:
Post a Comment