JPMorgan Q4 Earnings Preview: Buy Now or Wait for the Results?

Earnings Schedule and Peer Comparison - JPMorgan is scheduled to announce its Q4 2024 earnings on January 15, 2024, with Citigroup also reporting on the same day and Bank of America on January 16 [1][2] - JPMorgan's earnings are closely watched due to its broad presence across the finance sector, providing insights into the performance of other banks [1] Q4 2024 Earnings Expectations - The Zacks Consensus Estimate for Q4 revenues is $40.92 billion, indicating a 6.1$3.95, though this reflects a marginal decline from the prior-year quarter due to rising credit loss provisions and higher operating expenses [4] - JPMorgan has a strong earnings surprise history, beating estimates in each of the trailing four quarters with an average surprise of 7.73% [7][9] Key Drivers of Q4 Performance - Net Interest Income (NII): Expected to be $22.9 billion, with a Zacks Consensus Estimate of$22.88 billion, reflecting a 4.9% YoY decline [10][11] - Investment Banking (IB) Fees: Expected to rise 45% YoY to 2.55 billion, driven by improved M&A activity and strong equity and bond issuance volumes [12][13][14] - Markets Revenues: Expected to grow 15% YoY, with equity markets revenues projected at 2.12 billion (up 24.4% YoY) and fixed-income markets revenues at $4.18 billion (up 2.8$395.6 million, supported by decent refinancing and origination activities [17][18] Expenses and Asset Quality - Non-interest expenses are expected to rise to $23 billion due to branch expansion and technology investments [18][19] - Provisions for credit losses are estimated at$2.66 billion, with non-performing loans (NPLs) expected to increase 22.2% YoY to $8.46 billion [19][20] Management Guidance for 2024 - NII is projected to be$92.5 billion, up from $89.3 billion in 2023 [21] - Adjusted non-interest expenses are expected to be$91.5 billion, including increased technology spending of $17 billion (up 9.6% YoY) [21] - Loan growth is expected to be modest, with deposits remaining relatively flat [22] Valuation and Price Performance - JPMorgan shares outperformed the S&P 500 and peers in Q4 2024 [25] - The stock is trading at a forward P/E of 14.48X, above the industry average of 14.08X, indicating a stretched valuation [27] Strategic Outlook - JPMorgan is well-positioned to benefit from its scale, leadership in key businesses, and expansion into new markets [30] - The acquisition of First Republic Bank continues to support financials, though higher investment-related expenses are expected [30] - Volatility in capital markets may challenge fee income growth, and the stock's high valuation remains a concern [31]