The market took a shine to JPMorgan Chase's earnings because it crushed expectations -- logging earnings per share of $1.21 versus the $0.72 analysts expected.
But digging deeper, the quarter was more a feat of managing expectations than managing the business. The "London Whale" trading fiasco added another $4.4 billion of losses. JPMorgan was able to counteract those losses in the quarter with various actions like selling winners, but that's window dressing. It's also restating its first-quarter earnings downward because of larger than previously reported trading losses.
Despite the market reaction, JPMorgan's earnings were less impressive than Wells Fargo's. And its lukewarm Wall Street banking results could be bad news for Goldman Sachs and Morgan Stanley, which report next week. Of course, someone had to be on the other side of those trades.
Anand gives his thoughts on the takeaways from this earnings report in the following video.
With so many of the big finance firms getting bad press these days, you may be inclined to stay away from the sector entirely, but that could be a huge mistake. In fact, some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in our exclusive free report. Just click here to keep reading.
The article JPMorgan Chase Crushes Earnings originally appeared on Fool.com.
Anand Chokkaveluowns shares of Citigroup, Wells Fargo, and JPMorgan Chase. He also owns warrants on Citigroup, Wells Fargo, and JPMorgan Chase. The Motley Fool owns shares of JPMorgan Chase, Wells Fargo, and Citigroup and has created a covered strangle position in Wells Fargo.Motley Fool newsletter serviceshave recommended buying shares of Goldman Sachs. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.