美股金融业年q消费金融预览大多数金融公司定价合理

1、North America Equity Research16 July 20192Q18 Consumer Finance PreviewIntroducing 2020 PTs; Most Consumer Finance Companies Fairly PricedHeaded into 2Q19 earnings, our fundamental outlook for consumer finance remains unchanged. We expect very few surprises with strong labor markets and wage growth s

2、upporting benign credit. We note that organic earnings growthSpecialty & Consumer Finance Richard Shane AC(1-415) 315-6701richard.b.Bloomberg JPMA SHANE <GO>J.P. Morgan Securities LLCMelissa Wedel, CFA(1-415) 315-6763melissa.J.P. Morgan Securities LLCCharles Arestia(1-415) 315-6757charles.

3、arJ.P. Morgan Securities LLCHarshav Raj(91-22) 6157-3340harshaJ.P. Morgan India Private Limitedcontinues to decelerate across the group with capital returnsing an evenmore meaningful contributor to growth. Over the next 18 months, we believe the companies best positioned to return capital are the mo

4、st likely to outperform.·Establishing 2020 PTs Consistent with our historic practice, we are rolling PTS forward 12 months prior to 2Q earnings. Our Dec-20 price targets in the consumer finance space are based upon P/E multiples of our 2021 estimates. In establishing our outlook, we consider ab

5、solute and relative multiples in light of historical ranges as well as company specific risk, return and growth profiles.·Consumer financial health continues. Macro trends remain constructive: unemployment remains historically low at 3.7%, consumer leverage is ticking higher (but not in systemi

6、cally risky categories), and NCO metrics continue to normalize at a deliberate pace. We expect EPS growth to continue but decelerate into 2021, with growth increasingly driven by capital returns (rather than organic growth).·Pick into the Print: NAVI. We believe that NAVI offers the most near-t

7、erm upside from 2Q19 earnings. NAVI recently announced its first securitization of student refinance loans, marking a $16M gain on sale. We believe the company is positioned to raise 2019 guidance and establish a clear path to future capital returns. With shares trading at 6.1x 2019 EPS, we see 5 to

8、 7% N/T upside.·Ratings Changes: Upgrade OMF to OW. Based upon our newly established 2020 Price Targets, we are upgrading shares of OMF to OW. With shares trading at almost a 30% discount to the peer median, we believe the stock can deliver a mid to high-teens return through 2020 (potentially g

9、reater if thecompany establishes a meaningful capital months).return programover thenext 12Equity Ratings and Price TargetsMkt Cap ($ mn) Rating Price TargetCompanyTickerPrice ($)CurPrevCurEnd Date Dec-20PrevEnd Date Dec-19American Express Capital One Discover Financial Synchrony Financial OneMain H

10、oldings Ally FinancialSantander Consumer (SC) NavientSallie MaeAXP US COF US DFS US SYF US OMF US ALLY US SC US NAVI US SLM US108,384.5042,146.6026,577.8424,686.594,619.9012,990.699,024.483,216.004,129.42128.5789.7581.0335.8433.9232.0025.6013.409.55N OW OW OW OW OW N OW OWn/c n/c n/c n/c Nn/c n/c n/

11、c n/c135.00106.0091.0042.0041.0034.5027.0014.5013.00117.0098.0084.0037.5037.5033.0025.00n/c 12.00Dec-20 Dec-20 Dec-20 Dec-20 Dec-20 Dec-20 Dec-20 Dec-20Dec-19 Dec-19 Dec-19 Dec-19 Dec-19 Dec-19 Dec-19 Dec-19Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 15

12、Jul 19.See page 35 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware thatthe firm may have aof interest that could affect the objec

13、tivity of this report. Investors should consider this report as only a singlefactor in making their investment 获取报告1、2、3、每周群内7+报告；当日华尔街日报、4、行研报告均为公开利归原作者所有，起点财经仅分发做内部学习。扫一扫关注 回复：加入“起点财经”群。Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019While Consumer Metr

14、ics Remain Healthy, Extended Cycle Has Us CautiousAs we roll out our 2021 estimates, we consider the increasing likelihood that the current extended economic cycle will hit the inflection point and transition from expansion into the next recessionary period. While we have been early in anticipating

15、the next cycle, we believe there is a probability of the next recession occurring within our forecast period through 2021.That said, we do not believe the next recession will be as extreme or extended as the Global Financial Crisis of 2008. We do not see the excesses in so critical a sector (such as

16、 housing in 2007/2008). We believe the next recession is likely to resemble the Federal Reserves adverse scenario characterized in the 2019 CCAR framework, which assumes:···Unemployment peaking at 7.0% in 2H20Housing price index decline of 12% from peak in 1H19 to trough in 4Q20Commer

17、cial real estate price index decline of 16% from peak in 1H19 to trough in 1Q21Inflation peaking at 2.2% in 1Q20·State of the ConsumerConsumer strength remains generally intact, though consumers are exhibiting late cycle behavior and we increasingly expect that earnings are approaching a cyclic

18、al peak. Consumers and corporate borrowers are re-levering, spreads are narrowing, and terms are loosening.Unemployment Remains Historically LowConsumer finance companies are particularly sensitive to changes in the unemployment rate. The unemployment rate ticked 0.1% higher to 3.7% in June, though

19、still remains below a long-term average.Figure 1: Unemployment Rate12.0%10.0%8.0%6.0%4.0%2.0%0.0%3.7%Source: Bloomberg.2Mar-98 Jan-99 Nov-99 Sep-00 Jul-01 May-02 Mar-03 Jan-04 Nov-04 Sep-05 Jul-06 May-07 Mar-08 Jan-09 Nov-09 Sep-10 Jul-11 May-12 Mar-13 Jan-14 Nov-14 Sep-15 Jul-16 May-17 Mar-18Jan-19

20、Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019NCOs across the consumer lenders in our coverage universe continue to normalize, though NCOs as a percentage of unemployment still remain below the pre-crisis level, where it has been since mid-2010. Based on our JPM Tr

21、ust Index data, NCOs/unemployment were 65.3%, compared to the pre-crisis average of 93.6%. (This metric troughed at 35.1% in October 2013.)Figure 2: NCOs and Unemployment140%120%100%80%60%40%20%0%NCO/Unemployment (%)Pre-Crisis AverageSource: Bloomberg and J.P. Morgan estimates.Consumer Leverage is T

22、icking HigherConsumer debt outstanding totals $13.7T, which is approximately $1.0T higher than at the height of the Global Financial Crisis ($12.7T in 3Q08). This is comprised of$9.2T of mortgage debt (-0.5% since 3Q08), $1.3T of auto loans (+58% from 3Q08),$1.5T of student loans (+143% since 3Q08),

23、 $0.8T of credit card debt (-1.2% since 3Q08), and $0.8T of other consumer debt (-27% since 3Q08).Figure 3: Consumer Debt Outstanding$ in trillions$16$14$12$10$8$6$4$2$0$13.7$12.7MortgageHE RevolvingAuto LoanCredit CardStudent LoanOtherSource: Federal Reserve Bank of New York Consumer Credit Panel/E

24、quifax.The rapid growth rate in auto loans and student loan have garnered attention from theinvestment commuand often draw comparisons to the excesses in the housingmarket that precipitated the Global Financial Crisis. In our view, the level of debt outstanding across student and auto loans (individ

25、ually and combined) does not pose a systemic risk similar to that of mortgage debt in 2007/2008.3Oct-04 May-05 Dec-05 Jul-06 Feb-07 Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Jun-16 Jan-17 Aug-17 Mar-18 Oct-18 May-19Richard Shane (1-415)

26、315-6701richard.b.North America Equity Research16 July 2019Revised 2019 & 2020 Estimates;Introducing 2021 EstimatesProjected EPS Growth Still Positive, but Increasingly Driven by Capital Return Our revised earnings estimates and new estimates introduced for 2021 show continued positive, but slow

27、ing earnings growth. We note that most of our projected earnings growth for the consumer finance companies comes from capital return (e.g.,share repurchases) and a smaller portion comes from organic earnings growth.Figure 4: Credit Card &al Lender EPS Growth: Organic Growth vs. Capital Return50%

28、Solid areas reflect organic growth rate; shaded areas reflect EPS growth rate attributable to capital return.43%42%40%9%33%33%30%6%10%24%4%14%20%16%15%10%14% 13%33%13%12%11% 27%6%10%5%23% 8% 8% 7%8%10%20%7%5%7%17% 19%8%5%10%2%10%10%5%7%8%8%7%7%6%5%4%-3%-2%0%-3%-1%-7%-7%-10%AXPCOFDFSSYFOMFSource: Com

29、pany reports and J.P. Morgan estimates.Among the auto and student lenders, we project similar trends, with capital returns driving EPS growth, except for SLM, which remains our fastest organic growth consumer finance company under coverage.4201720182019e2020e2021e201720182019e2020e2021e201720182019e

30、2020e2021e201720182019e2020e2021e201720182019e2020e2021e-4%Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019Figure 5: Auto & Student Lender EPS Growth: Organic Growth vs. Capital Return30%Solid areas reflect organic growth rate; shaded areas reflect EPS growth rat

31、e attributable to capital return.20%18%23%20%14%3%13%12%12%10%15%10%12%4%19%6%5%15%14%10%4%12%13%9%7%-1%2%0%-8%-18%-10%-20%-30%ALLYSCNAVISLMSource: Company reports and J.P. Morgan estimates.Near-Term Impact from Changing Rate Expectations Should be Negligible Rate expectations shifted rapidly during

32、 2Q19; JPM strategists assume the Fed will cut rates twice through YE2019. We note that the middle- and longer-dated Treasuryyields have declined more than short-dated Treasuries. However, many of theconsumer finance companies under our coverage earn asset yields based on the prime rate, which has r

33、emained 5.50% since late December 2018.Figure 6: Treasury Curve3.00%2.75%2.50%2.25%2.00%1.75%1.50%1M2M3M6M1Y2Y3Y6/28/20195Y7Y10Y30Y4/1/2019Source: Bloomberg.Most of the consumer finance companies under our coverage disclose NII sensitivity to changes in interest rates. Because rate expectations have

34、 evolved so quickly, approximately half of the consumer finance companies we cover provide interest rate scenarios that assume interest rate increases in the most recent 10-Qs or 10-Ks.Those that do consider declining interest rate scenarios show either very modestgains or modest losses (of 1.5% - 1

35、.7%) of net interest month period following a 100bps rate decrease.e over the following 12-52019e2020e2021e2019e2020e2021e2019e2020e2021e2019e2020e2021e1%-14%-9%Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019Revised EstimatesTable 1: JPM Revised Estimates: Credit Ca

36、rd IssuersSource: Bloomberg estimates and J.P. Morgan estimates.Table 2: JPM Revised Estimates: Student LendersSource: Bloomberg estimates and J.P. Morgan estimates.Table 3: JPM Revised Estimates: Auto LendersSource: Bloomberg estimates and J.P. Morgan Economics.Rolling Out December 2020 PTsMany of

37、the consumer finance companies we cover are trading towards the high end of the range of LTM P/TBV multiples and solidly above Global Financial Crisis trough multiples. Among these are: AXP, DFS, SYF, ALLY, SC, and NAVI. Other companies like COF and OMF are trading towards the lower end of their res

38、pective LTM ranges and also well above GFC trough levels. SLM is a standout, trading just above trough level (1.59x vs. 1.45x) and well below the LTM high of 2.39x, despite being the highest organic growth EPS story in our coverage universe.6PreviousCurrentConsensus 2Q19 EPS2Q19 EPS2Q19 EPSEstimateE

39、s timateEs timatePreviousCurrentConsensus 2019 EPS2019 EPS2019 EPSEstimateEstimateEs timatePreviousCurrentConsensus 2020 EPS2020 EPS2020 EPSEstimateEstimateEs timatePreviousCurrentConsensus 2021 EPS2021 EPS2021 EPSEs timateEstimateEstimateALLY SC$0.76$0.91$0.88$0.93$0.93$0.91$3.62$3.70$3.63$2.67$2.6

40、7$2.66$4.15$4.15$4.06$2.90$3.03$2.97N/A$4.31$4.48N/A$3.39$3.44PreviousCurrentConsensus 2Q19 EPS2Q19 EPS2Q19 EPSEstimateEs timateEs timatePreviousCurrentConsensus 2019 EPS2019 EPS2019 EPSEstimateEstimateEs timatePreviousCurrentConsensus 2020 EPS2020 EPS2020 EPSEstimateEstimateEs timatePreviousCurrent

41、Consensus 2021 EPS2021 EPS2021 EPSEs timateEstimateEstimateNAVI SLM$0.49$0.55$0.53$0.33$0.33$0.30$2.14$2.20$2.13$1.25$1.25$1.26$2.27$2.23$2.23$1.42$1.42$1.42N/A$2.34$2.22N/A$1.70$1.61PreviousCurrentConsensus 2Q19 EPS2Q19 EPS2Q19 EPSEstimateEstimateEs timatePreviousCurrentConsensus 2019 EPS2019 EPS20

42、19 EPSEs timateEstimateEstimatePreviousCurrentConsensus 2020 EPS2020 EPS2020 EPSEstimateEs timateEs timatePreviousCurrentConsensus 2021 EPS2021 EPS2021 EPSEstimateEstimateEstimateAXP COF DFS SYF$2.05$2.06$2.03$2.78$2.78$2.88$2.23$2.11$2.12$1.05$0.96$0.94$8.00$8.02$8.06$11.03$11.02$11.12$8.80$8.79$8.

43、78$4.17$4.17$4.24$9.16$9.18$9.00$11.94$11.84$11.95$9.60$9.46$9.54$4.73$4.59$4.64N/A$10.40$9.87N/A$12.47$13.09N/A$10.09$10.22N/A$5.25$4.98OMF$1.31$1.31$1.34$5.82$5.82$5.72$6.28$6.28$6.16N/A$6.81$6.74Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019Figure 7: P/TBV: Trou

44、gh Levels vs. LTM Range and Current Level7.00xCurrent4.72x1.27x2.54x1.98x0.94x1.27x1.28x1.59x2.19xSource: S&P Capital IQ and J.P. Morgan estimates.Our primary valuation metric for consumer finance companies is forward P/E. However, in the context of P/TBV multiples, our new price targets imply t

45、he following:·Credit Cards &al Lenderso AXP: 5.51xo COF: 1.19xo DFS: 2.31xo SYF: 2.06xo OMF: 1.75x·Auto Lenderso ALLY: 0.89xo SC: 1.19x·Student Lenderso NAVI: 1.08xo SLM: 1.68x76.00x5.00x4.00x3.00x2.00x1.00x0.00xAXPCOFDFSSYFALLYSCNAVISLMOMFTrough1.17x0.30x0.43x1.34x0.54x0.74x0.73x

46、1.45x0.85x12M High5.08x1.59x2.78x2.11x0.94x1.27x1.31x2.39x3.19x12M Low3.56x1.07x1.85x1.34x0.67x0.82x0.74x1.45x1.72xRichard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019American ExpressNeutralAmerican Express Company (AXP;AXP US)Company DataYear-end Dec ($)FY17AFY18AFY19E(

47、Prev)FY19E(Curr)FY20E(Prev)FY20E(Curr)FY21EShares O/S (mn) 52-week range ($) Market cap ($ mn) Exchange rate Free float(%)3M - Avg daily vol (mn) 3M - Avg daily val ($ mn)Volatility (90 Day) Index843128.68-89.05108,384.501.0075.4%3.08368.6Net intereste ($ mn)6,45136,8787,66340,3388,61143,3658,60643,

48、3599,11346,0779,10846,0719,59948,343Adjusted Net Revenue ($ mn)Adj. nete ($ mn) Adj. EPS ($)BBG EPS ($) BVPS ($) DPS ($)Adj. P/E P/ BV5,2275.905.8519.421.3421.86.66,2917.327.3824.451.4817.65.36,6848.00- 27.261.6016.14.76,7028.028.0627.271.6016.04.77,3269.16- 29.471.7014.04.47,3419.189.0029.491.7014.

49、04.47,80810.409.8732.021.8412.44.015S&P 500BBG BUY|HOLD|SELL14|17|1Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and RisksAmerican Express Company (Neutral; Price Target: $135.00)Investment ThesisMaintain Neutral rating. We maintain our Neutral rating on AXP

50、 based primarily on valuation. In our view, AXP is positioned to benefit from continued consumer strength and increasing confidence. Despite the fundamental positives, AXP may face headwinds as rapid loan growth, seasoning, and mix shift (away from co- branded products) may lead to increased reserve

51、 build. AXP may face additional headwinds in the form of higher incremental marketing and rewards spend.ValuationWe introduce our Dec 2020 PT of $135. Our price target equates to 13.00x (unchanged) our newly established 2021 adj. EPS estimate of $10.40. Our target multiple is lower than AXPs histori

52、cal post-crisis multiple of 13.8x, which reflects potentially higher growth-driven reserves and current market sentiment. Our Dec 2020 price target implies a potential total return of approximately 4.6%.Forward P/E Multiple201612840AXPAXP average (since 2011)Source: S&P Capital IQ and J.P. Morgan estimates.8May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18May-19Richard Shane (1-415) 315-6701richard.b.North America Equity Research16 July 2019Forward P/E Multiple as a % of S&P 500 Forward P/E Multiple120%100%80%60%40