Stock (Symbol) |
JP Morgan (JPM) |
Stock Price |
$98 |
Sector |
| Financial |
Data is as of |
| November 27, 2017 |
Expected to Report |
| Jan 12 |
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 |
 Just want to take a quick peek at JP Morgan (JPM) before it reports earnings next week. These charts are as of 11/27/17 when the stock was $98. Today, 1/1/18, the stock is $108. My Fair Value for 2018 is $107, thus I’m reluctant to buy in up here. Still, the numbers look goo. JOM has reported profit growth of 20%, 22% and 14% the last three qtrs (Trump Effect) and Estimates are for profits to grow an average of 14% the next 4 qtrs. JPM has beaten the street the last 4 qtrs, thus this company could report high-teens or perhaps 20% profit growth over the next year– which would be outstanding. Plus, with the economy dong so well, interest rates could continue to rise which would enhance profitability even more. This stock sells for around 14x earnings, which is reasonable. Banks usually don’t get high P/Es, thus this is a fair price for the stock. The Est. LTG is 9% a year which is respectable for a conservative bank, and when you tack on a yield of 2% the total estimated annual return is in the double-digits. The only issue with this stock (other than its high after the nice run) is the beta is 1.2. The stock market has a beta of 1.0, which is neutral. This beta means JPM has higher volatility (and thus risk) than the market itself. Thus although the stock seems safe, the numbers don’t back up this claim. I have JPM on my radar for the Conservative Growth Portfolio and will look to add it on a dip. |
One Year Chart |
 Nice looking chart, but keep in mind the stock is now well past $100. Estimates for the next 4 qtrs are for profits to climb 8%, 20%, 16% and 10%. Since JPM has been beating the street, the company could have excellent growth coming in 2018. |
Fair Value |
 My Fair Value is 14x earnings but I could push the Fair Value P/E up to 17 next qtr. Note the company hasn’t really done a great job growing profits during the past decade as the Financial Crisis took a toll. |
Bottom Line |
 JP Morgan is the finest large bank available to investors, but the stock isn’t as safe as it seems. Thus I have been reluctant to carry it in the Conservative Portfolio. But banks in general have low P/Es compared to the market, and this could cause them to rise in 2018. Also, a strong economy could cause interest rates to continue to rise, and that would help boost profits beyond current expectations. JPM is on my radar for the Conservative Portfolio. I would look to add it if the stock market corrects. The stock is extended right now. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
