We assess JPMorgan Chase's value by looking at:
- Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
- Is the PE ratio less than the market average, and/ or less than the Banks industry average (and greater than 0)? (2 checks)
- Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
- Is the PB ratio less than the Banks industry average (and greater than 0)? (1 check)
JPMorgan Chase has a total score of 3/6, see the detailed checks below.
Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (5.02%).
Full details on the Value part of the Simply Wall St company analysis model.
Discounted cash flow (Dividend Discount Model)
The calculations below outline how an intrinsic value for JPMorgan Chase is arrived at by discounting future dividends to their present value. This approach is used for finance firms where free cash flow is difficult to estimate (e.g. Banks/ Insurance firms).
If the firm does not pay the majority of its earnings out as a dividend this method will often arrive at a value significantly lower than the share price.
See our documentation to learn about this calculation.
Value of the stock
Value = Expected dividends per share / (Discount Rate - Perpetual growth rate)
$27.25 = ($2.11 / (10.09% - 2.33%)
Value per share:
Current discount (share price of $92.8): -241%
Estimate of Discount Rate
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 = 10.09% = 2.33% + (1.011 * 7.67%)
Estimate of Bottom Up Beta
The Levered is used in the case of financial firms, but it is not adjusted for financial leverage like with non-finance firms. Therefore the average levered beta from comparable firms is used as the bottom-up beta. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Average Levered Beta from peers = 1.011
Levered Beta used in calculation = 1.011
- The risk free rate of 2.33% is from the 10 year government bond rate in US.
- The bottom-up beta is estimated by analysing other companies in the same industry.
- The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
- The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.
How is JPMorgan Chase expected to perform in the next 1 to 3 years based on estimates from 11 analysts?
The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.
Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Expected earnings growth over 3 years.
Future Earnings growth analysis
Is JPMorgan Chase expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.
Are JPMorgan Chase's annual earnings growth expected to exceed 3.4% over the next 3 years?
- After 1 year
- After 3 years
1 & 3 year estimated growth in earnings
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Analysts growth expectations
2 year growth check
Which of the these is expected to increase by over 50% in 2 year's time?
- Cash flow data unavailable.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
- JPMorgan Chase is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.
Improvement & Relative to industry
- Expected to be above the Banks industry average.
- An improvement in JPMorgan Chase's performance (ROE) is expected over the next 3 years.
Future performance checks
We assess JPMorgan Chase's future performance by looking at:
- Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
- Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
- Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
- Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
- Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
JPMorgan Chase has a total score of 2/6, see the detailed checks below.
Note: If no +3 year data is available, +2.5 year data may be used.
Note 2: We use GAAP per Share in all our calculations.
Full details on the Future part of the Simply Wall St company analysis model.
How has JPMorgan Chase performed over the past 5 years?
The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare JPMorgan Chase's growth in the last year to its industry (Banks).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
- JPMorgan Chase's earnings growth has exceeded the industry average over the past year.
- JPMorgan Chase's 1 year earnings growth exceeds its 5 year annual average (14.7% vs 6.6%).
- JPMorgan Chase has improved earnings in the past 5 years.
JPMorgan Chase's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
- Poor return on shareholders funds (ROE) last year.
- JPMorgan Chase performed above the Banks industry average based on return on assets (ROA) last year.
- Performance based on revenue producing assets (ROCE) is broadly the same over 3 years.
Past performance checks
We assess JPMorgan Chase's performance over the past 5 years by checking for:
- Has earnings per share (EPS) increased in past 5 years? (1 check)
- Has the EPS growth in the last year exceeded that of the Banks industry? (1 check)
- Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
- Is the Return on Equity (ROE) higher than 20%? (1 check)
- Is the Return on Assets (ROA) above industry average? (1 check)
- Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
JPMorgan Chase has a total score of 5/6, see the detailed checks below.
Note: We use GAAP Earnings per Share in all our calculations.
Full details on the Past part of the Simply Wall St company analysis model.
How is JPMorgan Chase's financial position? (This company is analysed differently as a bank or financial institution)
This company is a bank or financial institution.
Fundamentally a bank's business is based upon borrowing and lending money, for this reason they typically have high levels of debt and we analyse them differently.
This treemap shows a more detailed breakdown of JPMorgan Chase's finances.
If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
This company is a bank or financial institution, which is analysed accordingly below.
Below we check the amount of loans the bank has, how many of those are bad, and its ability to cover any bad loans.
- Acceptable proportion of non-loan assets held.
- Liabilities are made up of primarily low risk sources of funding.
- Loans are broadly funded by customer deposits.
- The banks level of assets compared to its equity is low (i.e. an appropriate level of borrowing to fund lending).
- High level of bad loan coverage.
- Acceptable level of bad loan write offs (less than 2%).
Financial health checks (Bank)
We assess JPMorgan Chase's financial health as a bank by checking for:
Full details on the Health part of the Simply Wall St company analysis model.
- Leverage (Assets to Equity > 20x)? (1 check)
- Coverage of bad loans (Bad Loan Coverage > 100%)? (1 check)
- Proportion of lower risk deposits compared to total funding (Deposits to Liabilities < 50%)? (1 check)
- Proportion of higher risk assets compared to total assets (Loans to Assets > 110%)? (1 check)
- Total loans compared to deposit funding (Loans to Deposits > 125%)? (1 check)
- Level of bad loans (Net Charge Off Ratio > 3%)? (1 check)
JPMorgan Chase has a total score of 6/6, see the detailed checks below.
What is JPMorgan Chase's current dividend yield, its reliability and sustainability?
Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Current annual income from JPMorgan Chase dividends. Estimated to be 2.54% next year.
If you bought $2,000 of JPMorgan Chase shares you are expected to receive $49 in your first year as a dividend.
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account?
It is up there with the best dividend paying companies?
- Paying above low risk savings rate. (2.25%)
- Paying below the markets top dividend payers. (3.18%)
Upcoming dividend payment
Purchase JPMorgan Chase on or before the 'Buy Limit' to receive their next dividend payment.
Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
Historical dividend yield
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.
We also check to see if the dividend has increased in the past 10 years.
- Dividends per share have been volatile in the past 10 (annual drop of over 10%).
- Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of JPMorgan Chase's earnings are paid to the shareholders as a dividend.
- Dividends paid are well covered by net profit (3x coverage).
Future Payout to shareholders
- Dividends after 3 years are expected to be well covered by net profit (3.2x coverage).
Income/ dividend checks
We assess JPMorgan Chase's dividend by checking for:
Full details on the Dividends part of the Simply Wall St company analysis model.
- Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
- Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
- Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
- If they have paid a dividend for 10 years has it increased in this time? (1 check)
- How sustainable is the dividend, can JPMorgan Chase afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
JPMorgan Chase has a total score of 4/6, see the detailed checks below.
What is the CEO of JPMorgan Chase's salary, the management and board of directors tenure and is there insider trading?
Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
Mrs. Mary Callahan Erdoes serves as the Chief Executive Officer at J.P. Morgan Asset Management, Inc. Mrs. Erdoes has been Chief Executive Officer of Asset & Wealth Management at JPMorgan Chase & Co. since September 2009. She joined J.P. Morgan Investment Management as the Head of Fixed Income for high-net-worth individuals, foundations and endowments in 1996. Mrs. Erdoes assumed responsibility for the global suite of investment solutions and investment strategy for private banking clients worldwide following the J.P. Morgan/Chase merger in 2000. Previously, she was the Chief Executive Officer at JPMorgan Private Bank through 2005 She became the Head of Investment Management and Alternative Solutions in 1999. Previously, Mrs. Erdoes served as the Chief Executive Officer of Asset and Wealth Management through September 2009 and Head of The Private Bank Unit until September 2009. She also served as a Managing Director at Meredith, Martin & Kaye. Mrs. Erdoes was employed at Bankers Trust in corporate finance, merchant banking and high yield debt underwriting departments. She became the Chairman and Chief Executive Officer at Global Wealth Management at J.P. Morgan in 2008. Mrs. Erdoes was the Chairman of JPMorgan Private Bank. Mrs. Erdoes was named as one of "The 100 Most Powerful Women in the World" by the Forbes magazine in 2009 and the US Banker magazine featured her among the 25 Most Powerful Women in Banking. She received an M.B.A. from Harvard Business School and B.S. from Georgetown University.
- CEO's compensation has been consistent with company performance over the past year.
- CEO's compensation appears reasonable.
Management Team Tenure
Average tenure of the JPMorgan Chase management team:
- The average tenure for the JPMorgan Chase management team is over 5 years, this suggests they are a seasoned and experienced team.
Chief Financial Officer and Executive Vice President
Chief Operating Officer
Chief Executive Officer of Asset & Wealth Management
CEO - Corporate & Investment Bank & CEO - Europe
Managing Director and Deputy General Counsel of Investment Bank
Board of Directors Tenure
Average tenure of the JPMorgan Chase board of directors:
- The tenure for the JPMorgan Chase board of directors is about average.
Board of Directors
Co-Head of Greater China Banking
Chairman of Japanese Investment Trust
Lead Independent Director
Recent Insider Trading
- JPMorgan Chase insiders have sold more shares than they have bought in the past 3 months.
Who owns this company?
We assess JPMorgan Chase's management by checking for:
- Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
- Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
- Is the average tenure of the management team less than 2 years? (1 check)
- Is the average tenure of the board of directors team less than 3 years? (1 check)
JPMorgan Chase has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.
Note: We use the top 6 management executives and board members in our calculations.
Note 2: Insider trading include any internal stakeholders and these transactions
Full details on the Management part of the Simply Wall St company analysis model.
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.
270 Park Avenue, New York, 10017, United States
JPMorgan Chase employees.