It’s time to breakdown one of the largest banks around. Here is the breakdown of $JPM, otherwise known as JPMorgan.
Current Price: $127.07
52/Wk High: $141.10
52/Wk Low: $76.91
Market Cap: $387.3 Billion
Dividend: $3.60 / 2.83% Yield
Read below for the breakdown!
JPMorgan Chase & Co. is one of the largest banks in the world with a financial footprint that reaches nearly every facet of the US and world economies.
Weeks ago the Fed announced it will allow the biggest banks to start share buybacks once again in Q1 of 2021, a move that not only benefits the banks but its shareholders as well.
Given the Fed decision, banks have gone on a massive run, with $JPM, $BAC, and $GS going on big rallies from near lows. Now weeks later the banks are still down year to date, and many wonder if the megabanks are still a buy.
Not only that, but JPMorgan recently announced the partial acquisition of cxLoyalty Groups, making a big bet on the travel recovery coming out of the pandemic.
Exploring JPMorgan’s stock price according to TREFIS (@trefis) data, 41.1% of the stock price is based on the bank’s Consumer & Community Banking segment.
Below is the further breakdown of JPMorgan’s stock price by segment.
Corporate & Investment Bank: 39.3%
Commercial Banking: 11.3%
Asset & Wealth Management: 8.0%
Digging into the most recent quarter JPMorgan beat expectations with an EPS of $2.92, much better than the expected EPS consensus estimate of $2.23. On a year over year basis, EPS improved by 8.96%.
Furthermore, $JPM reported $29.1 billion in revenues, just below the Q3 2019 revenues level of $30.1 billion. The bank also reported credit costs of $611 million and that average loans are up 1% throughout the quarter.
Rounding out JPMorgan’s firmwide numbers management reported that average deposits increased 30% and that liquidity sources totaled $1.3 trillion in Q3.
The bank then went on to report that JPMorgan earned $9.4 billion in net income and that the firm maintained its credit reserves of $34 billion, even though the pandemic was a major headwind.
Shifting into the Corporate & Investment Bank segment of JPMorgan, market revenues increased by 30%, and Global IB fees increased by 9% throughout the third quarter.
Rounding out the quarter ROE was solid among all of JPMorgan’s segments.
ROE by Segment;
Consumer & Community Banking: 29%
Consumer & Insitutitonal Banking: 21%
Commercial Banking: 19%
Asset & Wealth Management: 32%
Shifting into the balance sheet, the numbers are solid.
Total Debt: $557.607 Billion
Total Liabilities: $2.974963 Trillion
Total Assets: $3.246076 Trillion
Cash on hand (Sept. 30): $1,313.193 Billion
As for valuation, the multiples are more than fair.
Price to Earnings: 16.58x
Price to Sales: 3.26x
Price to Book: 1.61x
Price to Cash Flow: 8.62x
Management has also gone a solid job.
Return on Equity: 9.98%
Return on Assets: 0.85%
Given the numbers, the analysts are mixed with the mean price target sitting at $125.50/share, representing a -1.24% downside.
It is also important to note that the high price target is $150.00/share, representing an 18.05% upside, while the low price target is $98.00/share, representing a -22.88% downside.
The big money is also quite involved with 68.80% of JPMorgan being owned by institutions. Top holders include The Vanguard Group, State Street Global Advisors, and BlackRock Institutional Trust.
JPMorgan is bullish on a technical basis as well. According to the six-month charts, the MACD recently crossed back to the upside with minimal momentum around 2.69.
The six-month charts are also indicating an RSI of 66.58 and CCI of 140.2, both of which are on the higher end.
In short JPMorgan Chase & Co. is a solid long-term pick given the upcoming COVID-19 recovery, a solid balance sheet, and underlying growth segment by segment.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.