JPMorgan’s $150 Million Dividend Acquisition

By Olivia Finan,
Money & Investing Writer

JPMorgan Chase & Co. (NYSE: JPM) recently acquired a $150 million dividend from its metals storage business, Henry Bath & Son, just before it sold its materials in October of last year.

This is the first reported loss for the company in over a decade.

The payment shows big profits made during a time when warehouse owners were accused of exploiting exchange rules to collect more rent money.

Henry Bath is a company based out of Liverpool, England which stores, handles and trades metals on the London Metal Exchange. It is recognized by the world’s major international banks and allows clients to finance their commodity stocks.

Last year the company reported a $6.5 million after-tax loss and turnover shrank by 33 percent.

In 2012, before JPMorgan bought the business, it reported a $12 million profit as bumper profits of $113 million in 2009.

The last time Henry Bath was in the red was in 2002 after reporting a loss of just under $1 million.

That March, it paid a $7 million dividend before being sold to Sempra Energy (NYSE: SRE).

As of October 1, JPMorgan stock is down 2.98 percent to $59.99.

The bank is preparing to pay a third of a $1.8 billion settlement in a case that claims twelve major banks joined together to limit the completion in the swaps market.

JPMorgan will pay $595 million in order to settle the case.

JPMorgan acquired Henry Bath in July 2010 and was given the option to either sell the business or conform it as a passive banking investment without operational control.

JPMorgan decided to keep it and in February 2012, it reported a strategy to build a big metals stockpile in two locations.

Right now, TheStreet rates JPMorgan as a buy. Based on the positive investment measures taken recently, the company should outperform in the market.

Its strengths can be seen in multiple areas including growth in earnings per share, an increase in its net income, a stable cash flow, and expanding profit margins.

JPMorgan had improved its earnings per share by 5.5 percent in the last quarter compared to the same quarter last year.

Its net income has exceeded the S&P 500 in the last quarter as well, at an increase of 5.2 percent.

Cash flow has increased by 495.69 percent to $17,296 million compared to the same quarter last year.

Lastly, JPMorgan’s gross profit margin is very high, tallying 89.22 percent.

Despite how high the profit margin is, it has decreased over the last year; however, it is favorable in the industry average.

It is expecting to grow earnings at an average annual rate of 5.33 percent.

Analysts are predicting earnings increase of 10.64 percent from last year and an earnings increase of 10.32 percent for the following year.

In the year ahead, JPMorgan plans to focus on rising shareholder activism globally and encouraging companies to optimize their portfolios and business mix.

It expects companies to feel the pressure to deliver when it comes to its growth expectations.

A version of this article appeared in the Tuesday, October 6th print edition.

Contact Olivia at
olivia.finan@student.shu.edu

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s