JPM Stock Report

2-Year Price History

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Ockham's Rating

JPM Stock Evaluation

Because of a relatively quiet week from a price movement perspective, there has been little change in the valuation of JPM recently. Furthermore, there has been no change to the earnings guidance given by the company's management in the last week. Those are two key factors in our fundamental analysis which are unchanged since our last report. In accordance with these static factors, we see no catalyst for a ratings change this week.

JPM Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, JPM the high and low end of the Price to Sales per share ratios are 1.87x and 1.18x respectively.

Notice that JPM's current Price to Sales per share ratio is 1.46x, which is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that JPM does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock.

JPM Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of JPM, Ockham views their current Cash Earnings as significantly above its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for JPM to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 37.73 and a 19.48 low over the same period.

Therefore, at the current price of $34.45 and a Price to Cash Earnings ratio of 45.33, JPM is significantly overvalued. This diminishes the attractiveness of JPM until we see either a significant increase in cash earnings or a decline in price. A decline of the Price to Cash Earnings ratio of 58% is needed just to return to the historical cash earnings multiple.

JPM Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for JPM, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. JPM’s estimated annual dividend is $0.20 resulting in a current dividend yield of 0.58%. The highest dividend yield from JPM over recent history was 8.90% while the lowest dividend yield was 0.40%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as JPM that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 87.53% below the median yield.