JPMorgan Chase & Co Valuation – April 2019 #JPM

Company Profile (excerpt from Reuters): JPMorgan Chase & Co. (JPMorgan Chase), incorporated on October 28, 1968, is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. JPMorgan Chase’s activities are organized into four business segments, as well as a Corporate segment. The Company’s segments include Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Its principal bank subsidiaries include JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Company’s credit card-issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (JPMorgan Securities), the United States investment banking firm. The bank and nonbank subsidiaries of JPMorgan Chase operate nationally, as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Company’s principal operating subsidiary in the United Kingdom is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM – April 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $345,203,229,629 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 75.51% Pass
5. Moderate PEmg Ratio PEmg < 20 13.57 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.76
MG Growth Estimate 7.10%
MG Value $176.18
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $112.58
MG Value based on 0% Growth $65.99
Market Implied Growth Rate 2.54%
Current Price $105.37
% of Intrinsic Value 59.81%

JPMorgan Chase & Co. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.27 in 2015 to an estimated $7.76 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.54% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into JPMorgan Chase & Co. revealed the company was trading below its Graham Number of $116.88. The company pays a dividend of $2.72 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.57, which was below the industry average of 15.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

JPMorgan Chase & Co. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $116.88
PEmg 13.57
PB Ratio 1.38
Dividend Yield 2.58%
TTM Dividend $2.72
Number of Consecutive Years of Dividend Growth 8

 

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $282,031,000,000
Total Assets $2,622,532,000,000
Intangible Assets $54,349,000,000
Total Liabilities $2,366,017,000,000
Shares Outstanding (Diluted Average) 3,347,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.63
Dec2018 $9.00
Dec2017 $6.31
Dec2016 $6.19
Dec2015 $6.00
Dec2014 $5.29
Dec2013 $4.34
Dec2012 $5.20
Dec2011 $4.48
Dec2010 $3.96
Dec2009 $2.26
Dec2008 $1.35
Dec2007 $4.38
Dec2006 $4.04
Dec2005 $2.38
Dec2004 $1.55
Dec2003 $3.24
Dec2002 $0.80
Dec2001 $0.80
Dec2000 $2.86
Dec1999 $3.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.76
Dec2018 $7.07
Dec2017 $5.95
Dec2016 $5.65
Dec2015 $5.27
Dec2014 $4.82
Dec2013 $4.41
Dec2012 $4.11
Dec2011 $3.47
Dec2010 $3.05
Dec2009 $2.69
Dec2008 $2.85
Dec2007 $3.44
Dec2006 $2.78
Dec2005 $2.01
Dec2004 $1.84
Dec2003 $2.08

Recommended Reading:

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JPMorgan Chase & Co Valuation – November 2018 $JPM
JPMorgan Chase & Co Valuation – February 2018 $JPM
10 Best Dividend Paying Stocks for the Defensive Investor – August 2016
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10 Low PE Stock Picks for the Defensive Investor – August 2016

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Citizens Financial Group Inc Valuation – February 2019 $CFG
BB&T Corp Valuation – February 2019 $BBT
M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

JPMorgan Chase & Co Valuation – November 2018 $JPM

Company Profile (excerpt from Reuters): JPMorgan Chase & Co. (JPMorgan Chase), incorporated on October 28, 1968, is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. JPMorgan Chase’s activities are organized into four business segments, as well as a Corporate segment. The Company’s segments include Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Its principal bank subsidiaries include JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Company’s credit card-issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (JPMorgan Securities), the United States investment banking firm. The bank and nonbank subsidiaries of JPMorgan Chase operate nationally, as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Company’s principal operating subsidiary in the United Kingdom is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $365,761,960,005 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 103.55% Pass
5. Moderate PEmg Ratio PEmg < 20 15.35 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.44 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.17
MG Growth Estimate 7.29%
MG Value $165.46
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $103.92
MG Value based on 0% Growth $60.92
Market Implied Growth Rate 3.42%
Current Price $109.99
% of Intrinsic Value 66.48%

JPMorgan Chase & Co. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.82 in 2014 to an estimated $7.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.42% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into JPMorgan Chase & Co. revealed the company was trading below its Graham Number of $118.31. The company pays a dividend of $2.12 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 15.35, which was below the industry average of 16.94, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

JPMorgan Chase & Co. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $118.31
PEmg 15.35
PB Ratio 1.44
Dividend Yield 1.93%
TTM Dividend $2.12
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $270,124,000,000
Total Assets $2,615,183,000,000
Intangible Assets $54,697,000,000
Total Liabilities $2,356,227,000,000
Shares Outstanding (Diluted Average) 3,394,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.28
Dec2017 $6.31
Dec2016 $6.19
Dec2015 $6.00
Dec2014 $5.29
Dec2013 $4.34
Dec2012 $5.20
Dec2011 $4.48
Dec2010 $3.96
Dec2009 $2.26
Dec2008 $1.35
Dec2007 $4.38
Dec2006 $4.04
Dec2005 $2.38
Dec2004 $1.55
Dec2003 $3.24
Dec2002 $0.80
Dec2001 $0.80
Dec2000 $2.86
Dec1999 $3.69
Dec1998 $2.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.17
Dec2017 $5.95
Dec2016 $5.65
Dec2015 $5.27
Dec2014 $4.82
Dec2013 $4.41
Dec2012 $4.11
Dec2011 $3.47
Dec2010 $3.05
Dec2009 $2.69
Dec2008 $2.85
Dec2007 $3.44
Dec2006 $2.78
Dec2005 $2.01
Dec2004 $1.84
Dec2003 $2.08
Dec2002 $1.73

Recommended Reading:

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JPMorgan Chase & Co Valuation – February 2018 $JPM
10 Best Dividend Paying Stocks for the Defensive Investor – August 2016
5 Most Undervalued Stocks in the Dow – August 2016
10 Low PE Stock Picks for the Defensive Investor – August 2016
Best Stocks to Invest In: the Bank Industry – August 2016

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

JPMorgan Chase & Co Valuation – February 2018 $JPM

Company Profile (obtained from Marketwatch): JPMorgan Chase & Co. is a financial holding company, which provides financial and investment banking services. It offers a range of investment banking products and services in all capital markets, including advising on corporate strategy and structure; capital raising in equity and debt markets; sophisticated risk management; market making in cash securities and derivative instruments; and prime brokerage and research. It also offers investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. The company operates its business through the following segments: Consumer and Community Banking; Corporate and Investment Bank; Commercial Banking; and Asset & Wealth Management. The Consumer and Community Banking segment serves consumers and businesses through personal service at bank branches and through automated teller machine, online, mobile, and telephone banking. It is organized into Consumer and Business Banking, Mortgage Banking and Card, Merchant Services and Auto Card. The segment’s Consumer and Business banking offers deposit and investment products and services to consumers, and lending, deposit, and cash management and payment solutions to small businesses; Mortgage Banking includes mortgage origination and servicing activities, as well as portfolios comprised of residential mortgages and home equity loans, including the purchased credit impaired portfolio acquired in the Washington Mutual transaction; and Auto Card issues credit cards to consumers and small businesses, provides payment services to corporate and public sector clients through its commercial card products, offers payment processing services to merchants, and provides auto and student loan services. The Corporate and Investment Bank segment offers a suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, government and municipal entities. It offers a range of investment banking products and services in all capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, as well as loan origination and syndication. The Commercial Banking segment delivers industry knowledge, local expertise and dedicated service to United States and its multinational clients, including corporations, municipalities, financial institutions, and non profit entities. This segment provides financing to real estate investors and owners as well as financial solutions, including lending, treasury services, investment banking, and asset management to meet its client’s domestic and international financial needs. The Asset & Wealth Management segment provides asset and wealth management services. It offers investment management across all major asset services, including equities, fixed income, alternatives, and money market funds. JPMorgan Chase was founded in 1968 and is headquartered in New York, NY.

JPM Chart

JPM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $407,033,491,576 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 88.97% Pass
5. Moderate PEmg Ratio PEmg < 20 17.65 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.61 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.65
MG Growth Estimate 5.68%
MG Value $131.95
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $96.38
MG Value based on 0% Growth $56.50
Market Implied Growth Rate 4.57%
Current Price $117.31
% of Intrinsic Value 88.90%

JPMorgan Chase & Co. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $4.82 in 2014 to an estimated $6.65 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.57% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into JPMorgan Chase & Co. revealed the company was trading above its Graham Number of $107.91. The company pays a dividend of $2.12 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 17.65, which was below the industry average of 20.84, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

JPMorgan Chase & Co. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Graham Number $107.91
PEmg 17.65
PB Ratio 1.61
Dividend Yield 1.81%
TTM Dividend $2.12
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $284,080,000,000
Total Assets $2,533,600,000,000
Intangible Assets $54,392,000,000
Total Liabilities $2,277,907,000,000
Shares Outstanding (Diluted Average) 3,512,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.72
Dec2017 $6.31
Dec2016 $6.19
Dec2015 $6.00
Dec2014 $5.29
Dec2013 $4.34
Dec2012 $5.20
Dec2011 $4.48
Dec2010 $3.96
Dec2009 $2.26
Dec2008 $1.35
Dec2007 $4.38
Dec2006 $4.04
Dec2005 $2.38
Dec2004 $1.55
Dec2003 $3.24
Dec2002 $0.80
Dec2001 $0.80
Dec2000 $2.86
Dec1999 $3.69
Dec1998 $2.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.65
Dec2017 $5.95
Dec2016 $5.65
Dec2015 $5.27
Dec2014 $4.82
Dec2013 $4.41
Dec2012 $4.11
Dec2011 $3.47
Dec2010 $3.05
Dec2009 $2.69
Dec2008 $2.85
Dec2007 $3.44
Dec2006 $2.78
Dec2005 $2.01
Dec2004 $1.84
Dec2003 $2.08
Dec2002 $1.73

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10 Low PE Stocks for the Defensive Investor – July 2016
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

JPMorgan Chase & Co Valuation – July 2016 $JPM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how JPMorgan Chase & Co (JPM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): 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. Its segments are Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset Management. 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.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $235,459,266,895 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 108.99% Pass
5. Moderate PEmg Ratio PEmg < 20 11.86 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.93 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

JPM value chart July 2016

EPSmg $5.40
MG Growth Estimate 4.70%
MG Value $96.69
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $78.32
MG Value based on 0% Growth $45.91
Market Implied Growth Rate 1.68%
Current Price $64.04
% of Intrinsic Value 66.24%

JPMorgan Chase & Co. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.11 in 2012 to an estimated $5.4 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.68% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

JPMorgan Chase & Co. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

JPM charts July 2016

Graham Number $87.12
PEmg 11.86
PB Ratio 0.93
Dividend Yield 2.81%
TTM Dividend $1.80
Number of Consecutive Years of Dividend Growth 6

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Long-Term Debt $315,572,000,000
Total Assets $2,466,096,000,000
Intangible Assets $53,292,000,000
Total Liabilities $2,213,673,000,000
Shares Outstanding (Diluted Average) 3,666,500,000

Earnings Per Share History

Next Fiscal Year Estimate $5.45
Dec2015 $6.00
Dec2014 $5.29
Dec2013 $4.35
Dec2012 $5.20
Dec2011 $4.48
Dec2010 $3.96
Dec2009 $2.26
Dec2008 $1.37
Dec2007 $4.38
Dec2006 $4.04
Dec2005 $2.38
Dec2004 $1.55
Dec2003 $3.24
Dec2002 $0.80
Dec2001 $0.80
Dec2000 $2.86
Dec1999 $4.18
Dec1998 $2.83
Dec1997 $2.68
Dec1996 $1.65

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.40
Dec2015 $5.27
Dec2014 $4.82
Dec2013 $4.41
Dec2012 $4.11
Dec2011 $3.48
Dec2010 $3.05
Dec2009 $2.69
Dec2008 $2.85
Dec2007 $3.44
Dec2006 $2.78
Dec2005 $2.01
Dec2004 $1.84
Dec2003 $2.11
Dec2002 $1.80
Dec2001 $2.42
Dec2000 $3.10

Recommended Reading:

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

JP Morgan Chase Valuation – January 2016 Update $JPM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how JP Morgan Chase (JPM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): JPMorgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. JPMorgan Chase’s activities are organized into four business segments. The Company’s Consumer & Community Banking segment serves consumers and businesses through personal service at bank branches and through ATMs, online, mobile and telephone banking. The Corporate & Investment Bank, comprising Banking and Markets & Investor Services, offers investment banking, market-making, prime brokerage, and treasury and securities products and services. The Commercial Banking (CB) segment delivers industry knowledge, local expertise and service to the United States and the United States multinational clients. The Asset Management segment comprises investment and wealth management. The Company also operates a Corporate segment.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $209,640,300,017 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.23% Pass
5. Moderate PEmg Ratio PEmg < 20 10.15 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.83 Pass
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

JPM value chart January 2016

EPSmg $5.48
MG Growth Estimate 5.00%
MG Value $101.46
Opinion Undervalued
MG Value based on 3% Growth $79.50
MG Value based on 0% Growth $46.60
Market Implied Growth Rate 0.83%
Current Price $55.66
% of Intrinsic Value 54.86%

JP Morgan Chase qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The company passes all of the requirements of both investor types, an indication of the strong financial position.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.11 in 2012 to an estimated $5.48 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.83% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on JP Morgan Chase (JPM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

JPM charts January 2016

Graham Number $88.61
PEmg 10.15
PB Ratio 0.83
Dividend Yield 3.02%
Number of Consecutive Years of Dividend Growth 6

 

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec15
Long-Term Debt $309,756,000,000
Total Assets $2,351,698,000,000
Intangible Assets $54,948,000,000
Total Liabilities $2,104,125,000,000
Shares Outstanding (Diluted Average) 3,681,130,000

Earnings Per Share History

Next Fiscal Year Estimate $5.80
Dec15 $5.87
Dec14 $5.29
Dec13 $4.35
Dec12 $5.20
Dec11 $4.48
Dec10 $3.96
Dec09 $2.26
Dec08 $1.35
Dec07 $4.38
Dec06 $4.04
Dec05 $2.38
Dec04 $1.55
Dec03 $3.24
Dec02 $0.80
Dec01 $0.80
Dec00 $2.86
Dec99 $3.69
Dec98 $2.83
Dec97 $2.67
Dec96 $1.65

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.48
Dec15 $5.23
Dec14 $4.82
Dec13 $4.41
Dec12 $4.11
Dec11 $3.47
Dec10 $3.05
Dec09 $2.69
Dec08 $2.85
Dec07 $3.44
Dec06 $2.78
Dec05 $2.01
Dec04 $1.84
Dec03 $2.08
Dec02 $1.73
Dec01 $2.32
Dec00 $2.97

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Dow Stocks to Research – November 2015
The Best Companies of the Banking Industry – October 2015
15 Best Stocks For Value Investors This Week – 9/4/15
JPMorgan Chase & Co. Analysis – September 2015 Update $JPM
5 Undervalued Dow Stocks to Research – August 2015

Other ModernGraham posts about related companies

Bank of New York Mellon Valuation – January 2016 Update $BK
Fifth Third Bancorp Valuation – January 2016 Update $FITB
Huntington Bancshares Valuation – January 2016 Update $HBAN
Wells Fargo & Co Valuation – December 2015 Update $WFC
Citigroup Inc Valuation – December 2015 Update $C
People’s United Financial Corp Valuation – December 2015 Update $PBCT
M&T Bank Corp Valuation – December 2015 Update $MTB
KeyCorp Valuation – November 2015 Update $KEY
State Street Corp Valuation – November 2015 Update $STT
BB&T Corporation Valuation – November 2015 Update $BBT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

JPMorgan Chase & Co. Analysis – September 2015 Update $JPM

In the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.

We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.

In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

What follows is a specific look at how JPMorgan Chase & Co. (JPM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): JPMorgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. JPMorgan Chase’s activities are organized into four business segments. The Company’s Consumer & Community Banking segment serves consumers and businesses through personal service at bank branches and through ATMs, online, mobile and telephone banking. The Corporate & Investment Bank, comprising Banking and Markets & Investor Services, offers investment banking, market-making, prime brokerage, and treasury and securities products and services. The Commercial Banking (CB) segment delivers industry knowledge, local expertise and service to the United States and the United States multinational clients. The Asset Management segment comprises investment and wealth management. The Company also operates a Corporate segment.
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To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of JPM – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
5. Moderate PEmg Ratio PEmg < 20 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $5.15
MG Growth Estimate 7.25%
MG Value $118.54
Opinion Undervalued
MG Value based on 3% Growth $74.71
MG Value based on 0% Growth $43.80
Market Implied Growth Rate 1.83%
Current Price $62.68
% of Intrinsic Value 52.88%

JPMorgan Chase & Co. qualifies for both the Defensive Investor and the Enterprising Investor.  The company passes all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong fundamentals.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the next stage of the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $3.47 in 2011 to an estimated $5.15 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.83% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on JPMorgan Chase & Co. (JPM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

JPM Charts September 2015

Graham Number $90.42
PEmg 12.16
PB Ratio 0.97
Dividend Yield 2.62%
Number of Consecutive Years of Dividend Growth 5

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Long-Term Debt $316,754,000,000
Total Assets $2,449,599,000,000
Intangible Assets $56,138,000,000
Total Liabilities $2,208,394,000,000
Shares Outstanding (Diluted Average) 3,743,600,000

Earnings Per Share History

Next Fiscal Year Estimate $5.64
Dec14 $5.29
Dec13 $4.35
Dec12 $5.20
Dec11 $4.48
Dec10 $3.96
Dec09 $2.26
Dec08 $1.35
Dec07 $4.38
Dec06 $4.04
Dec05 $2.38
Dec04 $1.55
Dec03 $3.24
Dec02 $0.80
Dec01 $0.80
Dec00 $2.86
Dec99 $3.69
Dec98 $2.83
Dec97 $2.67
Dec96 $1.65
Dec95 $2.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.15
Dec14 $4.82
Dec13 $4.41
Dec12 $4.11
Dec11 $3.47
Dec10 $3.05
Dec09 $2.69
Dec08 $2.85
Dec07 $3.44
Dec06 $2.78
Dec05 $2.01
Dec04 $1.84
Dec03 $2.08
Dec02 $1.73
Dec01 $2.32
Dec00 $2.97
Dec99 $2.87

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Dow Stocks to Research – August 2015
5 Undervalued Dow Stocks to Research – July 2015
The 8 Best Stocks For Value Investors This Week – 6/6/15
5 Undervalued Dow Stocks to Research – June 2015
5 Undervalued Dow Components to Research – May 2015

Other ModernGraham posts about related companies

Citigroup Inc. Analysis – September 2015 Update $C
Wells Fargo & Co. Analysis – September 2015 Update $WFC
People’s United Financial Inc. Analysis – August 2015 Update $PBCT
M&T Bank Corporation Analysis – August 2015 Update $MTB
KeyCorp Analysis – August 2015 Update $KEY
State Street Corporation Analysis – August 2015 Update $STT
BB&T Corporation Analysis – August 2015 Update $BBT
PNC Financial Services Group Inc. Analysis – August 2015 Update $PNC
US Bancorp Analysis – August 2015 Update $USB
Comerica Incorporated Analysis – July 2015 Update $CMA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please review our detailed disclaimer.

JPMorgan Chase Analysis – June 2015 Update $JPM

500px-J_P_Morgan_Chase_Logo_2008_1.svgJPMorgan Chase (JPM) currently yields about a 2.7% dividend, and has grown its earnings well over the last few years. Recently, multiple analysts have focused on qualitative factors when reviewing the company. For example, Anthony Ruben of Inflection Point Consulting posited that the company’s moves to have fewer tellers will help the bottom line, while Holmes Osborne of Osborne Global Investors analyzed the CEO’s pay rate compared to competitors. These are great factors to consider in the final stages of an investment decision, but first one must use quantitative metrics to determine the company’s intrinsic value.

Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

JPM Chart

JPM data by YCharts

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To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
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Defensive Investor – Must pass all 6 of the following tests: Score = 6/6

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  4. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  5. Moderate PEmg (price over normalized earnings) Ratio – PEmg is less than 20 – PASS
  6. Moderate Price-to-Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – Must pass all 3 of the following tests or be suitable for a Defensive Investor: Score = 3/3

  1. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  2. Dividend Record – Currently pays a dividend – PASS
  3. Earnings Growth – EPSmg greater than that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $66.06
MG Value $113.90
MG Opinion Undervalued
Value Based on 3% Growth $73.75
Value Based on 0% Growth $43.23
Market Implied Growth Rate 2.24%
PEmg 12.99
PB Ratio 1.15

Balance Sheet – March 2015

Total Debt $309,643,000,000
Total Assets $2,557,140,000,000
Intangible Assets $55,222,000,000
Total Liabilities $2,341,280,000,000
Outstanding Shares 3,757,500,000

Earnings Per Share

2015 (estimate) $5.44
2014 $5.29
2013 $4.35
2012 $5.20
2011 $4.48
2010 $3.96
2009 $2.26
2008 $1.37
2007 $4.38
2006 $4.04
2005 $2.38

Earnings Per Share – ModernGraham

2015 (estimate) $5.09
2014 $4.82
2013 $4.41
2012 $4.11
2011 $3.48
2010 $3.05

Dividend History

JPM Dividend Chart

JPM Dividend data by YCharts

Conclusion

JPMorgan Chase passes the initial requirements of both the Defensive Investor and the Enterprising Investor. In fact, the company passes every requirement of both investor types, which is a rare accomplishment indicative of the company’s strong financial position. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, it has grown its EPSmg (normalized earnings) from $3.48 in 2011 to an estimated $5.09 for 2015. This is a fairly strong level of demonstrated growth, and outpaces the market’s implied estimate for annual earnings growth of 2.24% over the next 7-10 years.

In recent years, the company’s actual growth in EPSmg has averaged around 9.25% annually, and while the ModernGraham valuation model reduces the actual growth to a more conservative figure when making an estimate, the model still returns an estimate of intrinsic value well above the current price, indicating that JPMorgan Chase is significantly undervalued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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JP Morgan Chase Quarterly Valuation – February 2015 $JPM

JPMorgan Chase passes all of the initial requirements of both the Defensive Investor and the Enterprising Investor, which is a rare accomplishment indicative of the company’s strong financial position. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $3.05 in 2010 to $4.82 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 2.13% over the next 7-10 years. In fact, the historical growth is around 11.64% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out our previous ModernGraham valuations of JPMorgan Chase for a greater perspective!

Read the full valuation on Seeking Alpha!

JPM Chart

JPM data by YCharts

Disclaimer: The author did not hold a position in JP Morgan Chase (JPM) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

JP Morgan Chase Quarterly Valuation – November 2014 $JPM

500px-J_P_Morgan_Chase_Logo_2008_1.svgJPMorgan Chase performs extremely well in the initial stages of the analysis, passing all of the requirements of both the Enterprising Investor and the Defensive Investor. Any value investor following the ModernGraham approach based on Benjamin Graham’s teachings should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

To determine an estimate of the intrinsic value, one must consider the company’s earnings. Here, the company has grown its EPSmg (normalized earnings) from $3.05 in 2010 to an estimated $4.83 for 2014. This is a strong level of growth, approximately 11.66% each year. Even adjusting for a margin of safety to assume the company will not do as well in the future, a conservative growth estimate may be around 8.74%, which is well above the market’s implied forecast of only 2.01% earnings growth over the next 7-10 years. The company would have to see a significant slowdown in growth in order to be valued at the market’s current price. As a result, the ModernGraham valuation model returns an estimate of intrinsic value well above the price, supporting a clear conclusion that the company is significantly undervalued. All value investors are therefore encouraged to proceed with further research to determine whether JPMorgan Chase is suitable for their own individual portfolios.

Be sure to check out previous ModernGraham valuations of JP Morgan Chase for better perspective.

Read the full valuation on Seeking Alpha!

JPM Chart

JPM data by YCharts

Disclaimer:  The author did not hold a position in JP Morgan Chase (JPM) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

JP Morgan Chase Quarterly Valuation – August 2014 $JPM

500px-J_P_Morgan_Chase_Logo_2008_1.svgIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how JP Morgan Chase (JPM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity. One of the Company’s principal operating subsidiaries in the United Kingdom is J.P. Morgan Securities plc. JPMorgan Chase’s activities are organized into four business segments, as well as Corporate/Private Equity. The Company’s consumer business is the Consumer & Community Banking segment. In March 2014, Aurora Oil & Gas Ltd announced that JPMorgan Chase & Co and its affiliates has ceased to be substantial shareholder of Aurora Oil & Gas. In March 2014, Slater & Gordon Ltd announced that JPMorgan Chase & Co and its affiliates has ceased to be substantial shareholder of the Company. In May 2014, the Company and its affiliates ceased to be a substantial share holder of Windimurra Vanadium Ltd.
JPM Chart

JPM data by YCharts

Defensive Investor – must pass all 6 of the following tests: Score = 6/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – PASS
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $58.49
MG Value $134.84
MG Opinion Undervalued
Value Based on 3% Growth $69.91
Value Based on 0% Growth $40.98
Market Implied Growth Rate 1.82%
PEmg 12.13
PB Ratio 0.97

Balance Sheet – 6/30/2014

Total Debt $304,642,000,000
Total Assets $2,520,336,000,000
Intangible Assets $57,796,000,000
Total Liabilities $2,293,022,000,000
Outstanding Shares 3,761,280,000

Earnings Per Share

2014 (estimate) $5.28
2013 $4.35
2012 $5.20
2011 $4.48
2010 $3.96
2009 $2.24
2008 $0.84
2007 $4.38
2006 $3.82
2005 $2.32
2004 $1.45

Earnings Per Share – ModernGraham 

2014 (estimate) $4.82
2013 $4.41
2012 $4.07
2011 $3.40
2010 $2.92
2009 $2.51

Dividend History

JPM Dividend Chart

JPM Dividend data by YCharts

Conclusion:

JP Morgan Chase is suitable for either the Defensive Investor or the Enterprising Investor, as the company passes all of the requirements of either investor type.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $2.92 in 2010 to an estimated $4.82 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 1.82% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

Be sure to check out the previous ModernGraham valuations of JP Morgan Chase (JPM) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on JP Morgan Chase (JPM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in JP Morgan Chase (JPM) or in any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

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