With shares of JPMorgan Chase & Company (NYSE:JPM) trading at around $44.89, 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:
C = Catalyst for the Stock’s Movement
J.P. Morgan is a magnet for news. This can make it difficult to see the big picture. While there are many stats and numbers in this article, the most important stat is that the stock is up over 500 percent since its IPO. That might not be an outstanding gain over the course of several decades, but when you add the dividend, it’s not bad, either.
J.P. Morgan is a highly strategic company that is loved by Wall Street. For example, when it comes to analyst recommendations, there are currently 27 Buy recommendations, 8 Hold recommendations, and 2 Sell recommendations. The short position is also 1.10 percent, which is small. This reputation is justifiable considering J.P. Morgan has incredibly high margins and over $59 billion in operating cash flow. In regards to margins, the only big bank with better numbers is Wells Fargo & Company (NYSE:WFC).
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We all know about the London Whale and the result of $2 billion in losses. That entire trading group accounted for more than $5 billion in losses. However, CEO Jamie Dimon didn’t hide. He took the blame and apologized. Not only are Americans suckers for an apology (usually a good thing,) but this allowed for the stock to bottom right away.
J.P. Morgan has benefited from the boom in refinancing activity over the past year, but that trend might change in the near future. Rates don’t stay the same forever. J.P. Morgan was also the top underwriter of risky debt last year, which might be great for the short term, but this leaves a possibility for consequences down the road.
Let’s take a look at some more important numbers before forming an opinion on J.P. Morgan.