The calculations below outline how an intrinsic value for JPMorgan Chase is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
Note the calculations below are per share.
See our documentation to learn about this calculation.
Excess Returns = (Stable Return on equity – Cost of equity) (Book Value of Equity per share)
$-0.14 = (11.08% – 11.27%) * $70.76)
Terminal Value of Excess Returns = Excess Returns / (Cost of Equity - Expected Growth Rate)
$-1.54 = $-0.14 / (11.27% - 2.47%)
Value of Equity = Book Value per share + Terminal Value of Excess Returns
$69.22 = $70.76 + $-1.54Inputs used in model:
Stable EPS = Stable Book Value * Return on Equity
$7.84 = $70.76 * 11.08%
Source: Weighted future Return on Equity estimates from 18 analysts.
Book Value of Equity per Share: $70.76
Source: Weighted future Book Value estimates from 14 analysts.
Expected Growth Rate: 2.47%
Source: Risk Free Rate/ 10 year Government Bond Rate in USD.
Value per share:
Current discount (share price of $98.64): -42.51%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 11.27% = 2.47% + (1.168 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($343,210,631,759).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
1.168 = 0.58 (1 + (1- 30%) (172.58%))
Levered Beta used in calculation = 1.168
This company is a bank or financial institution, which is analysed accordingly below.
Mr. James Dimon, also known as Jamie, has been the Chairman, Chief Executive Officer and President of JPMorgan Chase & Co. since December 31, 2006 and December 31, 2005 respectively. Mr. Dimon served as the Chief Executive Officer of Bank One Corporation from March 27, 2000 to July 2004. He served as the Chief Executive Officer and Chairman of Bank One Wisconsin. He served as the Chief Operating Officer of JPMorgan Chase & Co. from July 1, 2004 to December 31, 2005. Mr. Dimon served as a Co-Chief Executive Officer of Salomon Smith Barney Holdings Inc., is a subsidiary of Citigroup Inc. from October 1998 to November 1998. He served as the Chief Executive Officer of Smith Barney Holdings, Inc. From November 1998 to March 2000, he was a Private Investor. He served as the President of Citigroup Inc., from October to November 1998. Mr. Dimon served as the President and Chief Operating Officer of J.P. Morgan & Co. Inc. since January 2004. He had extensive experience at Commercial Credit Company and American Express Company. From November 1993 to October 1998, he served as President and Chief Operating Officer of Travelers Group Inc., as well as serving in several other executive positions with Travelers' subsidiaries Smith Barney Inc. and Salomon Barney Inc. during that period. Mr. Dimon served as the Chairman at The Clearing House LLC. He served as the Chairman of Smith Barney Holdings, Inc. He served as Chairman of Bank One Corporation from March 27, 2000 to July 2004. He served as the Chairman of Citigroup Inc. from October 1998 to November 1998. He has been an Executive Director of JPMorgan Chase & Co. since 2000. He serves as Director of Kennedy Center Corporate Fund, The Partnership for New York City, Inc. and Catalyst Inc. He served as a Director of Bank One Corporation since 2000 and Yum! Brands Inc. since 1997. He serves as Vice Chairman of The Business Council. He served as Director of The Federal Reserve Bank of New York until December 31, 2013. He serves as a Director of College Fund/UNCF and Harvard Business School. He serves as a Trustee of The University of Chicago and New York University Medical Center and a Director of the National Center for Addiction and Substance Abuse. He served as a Director of Chicago Clearing House Association. He served as a Director of Smith Barney Holdings, Inc. He serves as Co-Chair of Commission to Enhance Competitiveness for Financial Services Roundtable. He is Member of Executive Committee at Business Roundtable, The. Mr. Dimon graduated from Tufts University in 1978 and received an MBA from Harvard Business School in 1982.
Average tenure and age of the JPMorgan Chase management team in years:
Average tenure and age of the JPMorgan Chase board of directors in years:
JPMorgan Chase & Co. operates as a financial services company worldwide. It operates through Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management segments. The Consumer & Community Banking segment offers deposit and investment products and services to consumers; lending, deposit, and cash management and payment solutions to small businesses; residential mortgages and home equity loans; and credit cards, payment services, payment processing services, auto loans and leases, and student loans. The Corporate & Investment Bank segment provides investment banking products and services, including advising on corporate strategy and structure, and capital-raising in equity and debt markets, as well as loan origination and syndication; treasury services, such as cash management and liquidity solutions; and cash securities and derivative instruments, risk management solutions, prime brokerage, and research services. It also offers securities services, including custody, fund accounting and administration, and securities lending products for asset managers, insurance companies, and public and private investment funds. The Commercial Banking segment offers financial solutions, including lending, treasury, investment banking, and asset management to corporations, municipalities, financial institutions, and nonprofit entities, as well as financing to real estate investors and owners. The Asset & Wealth Management segment provides investment and wealth management services across various asset classes, such as equities, fixed income, alternatives, and money market funds; multi-asset investment management services; retirement services; and brokerage and banking services comprising trusts, estates, loans, mortgages, and deposits. JPMorgan Chase & Co. was founded in 1799 and is headquartered in New York, New York.
|Name:||JPMorgan Chase & Co.|
JPMorgan Chase & Co.
270 Park Avenue,
New York, 10017,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NYSE||JPM||Common Shares||New York Stock Exchange||US||USD||05. Mar 1969|
|DB||CMC||Common Shares||Deutsche Boerse AG||DE||EUR||05. Mar 1969|
|XTRA||CMC||Common Shares||XETRA Trading Platform||DE||EUR||05. Mar 1969|
|LSE||0Q1F||Common Shares||London Stock Exchange||GB||CHF||05. Mar 1969|
|SWX||JPM||Common Shares||SIX Swiss Exchange||CH||CHF||05. Mar 1969|
|SWX||JPM||Common Shares||SIX Swiss Exchange||CH||CHF||05. Mar 1969|
|WBAG||JPM||Common Shares||Wiener Boerse AG||AT||EUR||05. Mar 1969|
|SNSE||JPM||Common Shares||Santiago Stock Exchange||CL||USD||05. Mar 1969|
|BVC||JPM||Common Shares||Bolsa de Valores de Colombia||CO||COP||05. Mar 1969|
|BMV||JPM *||Common Shares||Bolsa Mexicana de Valores||MX||MXN||05. Mar 1969|
|NYSE||JPM.PRF||DEP 1/4PFD 5.72%||New York Stock Exchange||US||USD||15. Jul 2008|
|NYSE||JPM.PRG||DEP 1/4PFD 5.49%||New York Stock Exchange||US||USD||15. Jul 2008|
|NYSE||JPM.PRE||DEP 1/4PFD 6.15%||New York Stock Exchange||US||USD||15. Jul 2008|
|NYSE||JPM.PRA||DEP 1/400 PFD P||New York Stock Exchange||US||USD||31. Jan 2013|
|NYSE||JPM.PRB||DEP SHS RP PFD T||New York Stock Exchange||US||USD||27. Jan 2014|
|NYSE||JPM.PRE||DEP SHS PFD W||New York Stock Exchange||US||USD||18. Jun 2014|
|NYSE||JPM.PRF||DEP SHS 1/400||New York Stock Exchange||US||USD||09. Feb 2015|
|NYSE||JPM.PRG||DEP SHS PFD||New York Stock Exchange||US||USD||01. Jun 2015|
|NYSE||JPM.PRH||DEP SHS REP PFD||New York Stock Exchange||US||USD||24. Jul 2015|
|DB||CMCE||6.1%-FRN SNR PERP USD||Deutsche Boerse AG||DE||USD||19. Sep 2014|
|BOVESPA||JPMC34||BDR EACH REPR 0.5 COM USD1||Bolsa de Valores de Sao Paulo||BR||BRL||24. Aug 2012|
|BASE||JPM||CEDEAR REP 1/10 USD2.5||Buenos Aires Stock Exchange||AR||ARS||17. Jul 2001|
|DB||CMC2||PERP SR NT 7.9%||Deutsche Boerse AG||DE||USD||18. Apr 2008|
|DB||CMC5||PERP -S NT 6.75%||Deutsche Boerse AG||DE||USD||17. Jan 2014|