Is JPMorgan Chase Well-Positioned for the Future?

With shares of JPMorgan Chase & Co. (NYSE:JPM) trading around $57, is JPM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

JPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management, and private equity. Financial services companies like JPMorgan Chase are essential for well-functioning economies around the world.

Market expectations were pretty low for JPMorgan going into the company’s second-quarter earnings release, and the company was able to easily beat the numbers. But while the stock rose in the days following this earnings beat, and while management seems to be pretty optimistic in the press release and conference call, the fact remains that JPMorgan released weak earnings. The company’s net revenue fell 5 percent year-over-year, and net income fell by a whopping 21 percent. These are simply lousy numbers, and despite this the company still trades at 15 times earnings, a rather rich price-to-earnings multiple for a company reporting declining earnings.