A Year to Forget for JPMorgan Chase
As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.
Today, let's take a look at JPMorgan Chase (NYS: JPM) . As if things weren't bad enough for the big Wall Street banks over the past few years, Europe's woes now have everyone worried that despite the hundreds of billions of dollars in bailouts that U.S. taxpayers financed in 2008, a sovereign debt default on the Continent could lead to cascading systemic failures that would take the world's financial system down. Below, I'll take a closer look at the events that moved shares of JPMorgan Chase this year.
Stats on JPMorgan Chase
|2011 YTD Return||(19.1%)|
|Market Cap||$128 billion|
|1-Year Revenue Growth||18.4%|
|1-Year Earnings Growth||26.9%|
|Tier 1 Capital Ratio||12.1%|
|CAPS Rating (out of 5)||***|
Sources: S&P Capital IQ; Motley Fool CAPS.
Why did JPMorgan Chase lose ground in 2011?
JPMorgan is an interesting hybrid. As an investment bank, it goes up against rivals including Goldman Sachs (NYS: GS) . But its Chase unit has one of the most recognized credit card brands and helps make the bank the largest in the U.S. by total assets.
As disappointing as JPMorgan's stock return was this year, its losses weren't the worst on Wall Street by a long shot. Although US Bancorp (NYS: USB) and Wells Fargo (NYS: WFC) had their stocks hold up better than JPMorgan, several other big financial institutions had double or more the losses that JPMorgan posted. Despite continuing fallout from the housing bubble, U.S. debt woes, and the problems in Europe, the bank was able to quintuple its dividend earlier this year and is making big profits from wide interest rate spreads.
The real trouble for JPMorgan could come down the road, though. The Fed recently issued proposed regulations that would require the bank, along with Bank of America (NYS: BAC) and Citigroup (NYS: C) , to meet the more stringent capital requirements under the Basel III framework. Yet because JPMorgan currently has better Tier 1 capital ratios than either B of A or Citi, the requirements may actually boost JPMorgan's competitive advantage.
JPMorgan may not be the best bank stock out there, but we think we've found some better ones. Read the Motley Fool's latest special report on banking to find out which banks the smartest investors are buying now. The report is free, but it won't be there forever, so check it out today.
Click hereto add JPMorgan Chase to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
At the time this article was published