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JPMorgan Chase & Co. (JPM, Financial) CEO Jamie Dimon has clout in Washington D.C. Last week, he met for 40 minutes with U.S. Senator Mitch McConnell in the minority leader’s office. For most of us, that’s a tough appointment to get. Since Dimon runs the largest of the big New York City banks, McConnell has time to talk with him.
The bank itself is one of the very few Dow Industrial components now trading with a price-earnings ratio of just 10. Compare that to Salesforce.com Inc. (CRM, Financial), another of the 30 stocks in the index, which has a price-earnings ratio of 124 right now. Visa Inc.'s (V, Financial) price-earnings ratio is 46. The overall Dow Jones Industrial Average trades with a price-earnings ratio of 22.
JPMorgan Chase might be classified as a value stock given how very low its multiple is these days compared to most other components and to the industrials sector as a whole.
How big of a bank is it? The market capitalization is $490 billion and the enterprise value is $114 billion. With a current price-book ratio of 1.93, it looks undervalued by this metric as well, especially when compared to the S&P 500’s price-book ratio of 4.76.
The earnings per share this year for JPMorgan Chase are off by 17.20%. The earnings per share growth rate for the past five years is 8.10%. Wall Street analysts are predicting a negative 20% earnings per share growth rate for next year. Financial institutions in general will naturally be affected greatly by any changes in Federal Reserve policy about interest rates.
GuruFocus's analysis of the company's financial strength is worth considering. Here’ s how it looks:
That “severe warning sign” for financial strength is a problem which is likely being addressed by management. On the other hand, interest coverage as “comfortable” gets a good sign.
The short float sits at just 0.51%, a relatively low amount which may indicate a low level of concern from investors about the bank. While Societe General recently downgraded the stock from buy to hold, UBS in December issued an outright buy on the company.
JPMorgan Chase pays a dividend of $4 per share. The annualized yield comes to 2.39%.
Average daily volume for JPMorgan Chase on the New York Stock Exchange is a highly liquid 11 million shares.
The stock traded at $75 per share during the March 2020 pandemic selloff and now goes for $166 per share. If the main goal is to keep investors pleased with price increases, then Dimon is getting the job done. That the price-earnings ratio remains so low may indicate unrecognized value.
