JPMorgan Chase

Stock: JPM

Rating: Good

Author: Waleed M. Tariq

Summary

  • JPMorgan has more assets than BAC, WFC, and C.
  • The share price decrease has lowered value multiples.
  • JPM is diversified so it won’t crash and burn.

Bullish

  • JPM’s diversified portfolio caps its growth but protects it from collapsing and burning.
  • JPM’s higher profit margins, ROA, and ROE reflect its competent management.
  • The bank’s nine consecutive dividend increases, reasonable valuation, mild volatility, and sensible investments fuel my optimism.

Bearish

  • The share price decrease has lowered value multiples.
  • As interest rates fell to zero during the pandemic, JPM’s NII fell by 4.2% in 2021 to $52.7 bn from $55 in 2020.

JPM’s Stable, Balanced Revenue Streams

  • As interest rates hit zero, JPM’s NII fell 4.2% to $52.7 bn in 2021. Variable-rate loans and securities triggered the drop. CIB’s bond trading increased 5%.
  • JPM has 5- and 10-year NII growth. Interest income stopped falling when rates fell. Active economy increased fixed-income.
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Data by YCharts
  • This shows the company’s revenues. This has benefited its annual sales over the past 5 years.
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Data by YCharts

Stable dividend history

  • JPM has a high dividend payout ratio, above 25%. Only Citigroup has a higher dividend yield. JPM’s dividend should keep growing after 9 years.
  • Despite the bank’s low dividend growth and yield, it’s a strong long-term investment.
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Data by YCharts

Valuation

  • Expensive: WFC 3.26 PS. P/TBV is higher than peers’. Large banks have a lower P/E ratio than the market due to their high debt-to-equity ratio. Fair, “below-average” valuations.
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Data by YCharts

Conclusion

  • Investors seeking growth or dividends can find better shares elsewhere. JPM stock is a fantastic long-term investment for conservatives.