Stock (Symbol) |
JP Morgan (JPM) |
Stock Price |
$87 |
Sector |
| Financial |
Data is as of |
| January 29, 2017 |
Expected to Report |
| Apr 13 |
Company Description |
 JPMorgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services. It operates in four segments, as well as a Corporate segment. The Consumer & Community Banking segment serves consumers and businesses through personal service at bank branches and through automatic teller machines, online, mobile and telephone banking. The Corporate & Investment Bank segment, comprising Banking and Markets & Investor Services, offers investment banking, market-making, prime brokerage, and treasury and securities products and services to corporations, investors, financial institutions, and government and municipal entities. The Commercial Banking segment provides financial solutions, including lending, treasury services, investment banking and asset management. The Asset Management segment comprises investment and wealth management. Source: Thomson Financial |
Sharek’s Take |
 JP Morgan (JPM) surged after Trump’s election, but future rate hikes and curbing bank regulations could lead to better profits than Wall Street is currently expecting.The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in 2010 to force banks to lower risk. Donald Trump wants to reduce banking regulations, and this would let banks grow easier and also lead to lower compliance costs. Also, these interest rate hikes the Federal Reserve is implementing could result in double-digit profit growth. JP Morgan is the largest bank in the U.S. offering consumer banking, corporate & investment banking, commercial banking and asset management. The stock has an Estimated Long-Term Growth Rate of 6% in addition to a 3% yield, and sells for a reasonable 13x earnings. Management also buys back stock, $2 billion last qtr. I feel JPM is a good investment, but the low Est. LTG isn’t enough for the Growth Portfolio. And the stock isn’t safe enough for the Conservative Portfolio. JPM carries a beta of 1.27, which is more than the S&P 500’s 1.00. Thus this stock is more volatile than the stock market. Also, Value Line gives JPM a safety rating of 3, which is average (1 or 2 would be a safe stock). |
One Year Chart |
 Last qtr profits rose 20% on 2% sales growth as deposits were up 11% and credit card sales volumes jumped 14%. Soid numbers. Estimates for the next 4 qtrs now stand at 14%, 6%, 6% and 6%. Wit ha P/E of 13 the stock is reasonable. The Est. LTG of 6% is low, but when you add in the 3% yield that makes for a nice 9% estimated total return. Nice if the stock had a high safety factor I mean. |
Fair Value |
 You can see the recession/financial crisis years here, when profits fell, that’s understandable. Jamie Dimon became President of the company in July 2004 and outside this one-time event profits only fell one year during his reign — in 2013. With rates on the rise and regulations on the decline, my Fair Value is 14x earnings, or $92 this year. Analysts expect a big 14% rise in profits in 2018, and this gives the stock nice upside to $104 for those willing to wait two years. |
Bottom Line |
 Donald Trump’s Presidency has been a boon for banks, and less regulations could push profits beyond expectations. I was going to buy this stock for the Conservative Growth Portfolio but decided to hold off as the safety factor isn’t quite high enough. And the 6% Est. LTG isn’t good enough for the Growth Portfolio — especially since growth stocks are hot again. JPM is on my radar for the Conservative Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
