To The Moon

$JPMorgan Chase(JPM)$ is scheduled to report its four-quarter earnings for 2024 on 15 Jan before the market open.

JPMorgan is expected to report $4.09 per share in earnings (up +1.3% year-over-year) on $40.9 billion in revenues (up +6.1% YoY).

During its previous quarter report on 11 Oct 2024, we have seen JPM shares making about 15% change. The last earnings call reflects a strong quarter with notable income and revenue growth, record performances in certain segments, and continued leadership in retail deposits. However, there are challenges in terms of credit costs, net interest income projections, and deposit margin pressures. Despite these challenges, the overall outlook remains positive, with a focus on strategic investments and market share gains.

The stock was up nicely on the last earnings release on 11 October, reflecting positive commentary about the outlook. Estimates have been steadily increasing, with the current $4.09 per share estimate up from $3.82 a month ago and $3.79 three months back.

JPM Guidance On NII

During JPMorgan Chase's Q3 2024 earnings call, the firm provided detailed guidance on several key financial metrics. The company reported a net income of $12.9 billion with an EPS of $4.37, supported by revenue amounting to $43.3 billion and an ROTCE of 19%.

The firm's revenue increased by 6% year-on-year, driven by a $274 million increment in NII ex Markets and a 17% rise in NIR ex Markets. Expenses rose by 4% to $22.6 billion, mainly due to higher compensation and an increase in employees.

Credit costs were reported at $3.1 billion, influenced by net charge-offs and reserve builds. The CET1 ratio remained flat at 15.3%. Looking ahead, the firm expects 2024 NII ex Markets to be approximately $91.5 billion, with adjusted expenses projected at around the same amount.

The guidance also highlighted ongoing strategies to manage expenses and capital amid an uncertain economic and regulatory environment.

JPMorgan Chase net income for the twelve months ending 30 September 2024 was $52.068B, a 5.22% increase year-over-year. JPMorgan Chase annual net income for 2023 was $47.76B, a 33.07% increase. JPMorgan Chase annual net income for 2022 was $35.892B, a 22.82% decline from 2021.

JPM Post Earnings Movement

The options market overestimated JPM stocks earnings move 67% of the time in the last 12 quarters.The predicted move after earnings announcement was ±3.2% on average vs an average of the actual earnings moves of 3.3% (in absolute terms).

This shows that JPM tended to be more volatile than the options market predicted for the earnings stock price reaction.

JPM IV Percentile Rank

JPM implied volatility (IV) is 26.0, which is in the 95% percentile rank. This means that 95% of the time the IV was lower in the last year than the current level. The current IV (26.0) is 5.3% above its 20 day moving average (24.6) indicating implied volatility is trending higher.

JPM IV vs 20-Day HV

The current IV (26.0) in JPM is 24.7% above its 20 day HV (20.8) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.

JPM Implied Volatility Skew Shows Slightly Bullish Signal

The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls.

The implied volatility for upside calls is increasing relative to downside puts, this suggests the market is pricing in more optimism to the upside.

The current skew indicator is showing slightly bullish signal.

Technical Analysis - Multi-timeframe

Despite the recent weeks of consolidation and correction, also hitting the financial stocks, JPM had managed to stay traded above the short-term and long-term MA, and we are also seeing MACD converging.

The MACD looks to form a bullish crossover, and MTF is giving an encouraging strong upward trend.

Summary

JPM should be benefitting from increase in investment banking fees which were up 31% year-on-year, with advisory fees up 10% and underwriting fees significantly increased in the last quarter.

Despite challenges, JPM remains optimistic about its pipeline and future growth opportunities.

Appreciate if you could share your thoughts in the comment section whether you think JPM would post a better NII and remain resilient as we might be going through bouts of volatility..

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.