AGU Fundamental Research Investment Analysis, Agrium Inc.

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The Razor’s Edge

2-Year Price History

Recent Price
(2/20/2009 4:00 PM)
$19.90
52-Week Price
$17.70 – $50.63
Market Capitalization
$76.9 Billion
Dividend Yield
7.40%
Most Recent Dividend
$1.44

About JPMorgan Chase & Company

JPMorgan Chase & Company is considered to operate in the Financial sector. They specifically operate in the Money Center Banks business segment contained within the Banking industry.

A financial holding Company whose activities are organized, for management reporting purposes, into six business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management.

Ockham’s Rating

We are reaffirming our Fairly Valued rating for the time being because there have been no major changes in our analysis in the last week. In the following report we will look at the stock versus itself historically, which is clearly useful in order to evaluate if a security is overvalued or undervalued. In addition, we analyze the stock as a member of the Financials sector and the market as a whole to understand the volatility and risk and reward potential.

It is always scary to upgrade stocks in a market where everything seems to be headed downwards, but it is important to remember that these drops in price are often the best time to buy a bargain. We are not yet ready to upgrade JPM as of this week’s report because the fundamentals have not crossed a strategic threshold in our methodology, but we are certainly becoming more interested in some of the value that is being uncovered in this market downturn.

Looking at the basics, the price of JPM dropped from $27.63 as of 02/07/2009 to a price of $24.69 as of 02/14/2009. As long as fundamentals remain intact, this decrease does increase the attractiveness of JPM, but a drop of 10.64% is not substantial enough to warrant a upgrade at this time.

Also, there have been no meaningful adjustments in earnings expectations to report in the last week.

JPM Stock Evaluation

In this week’s report, we are reiterating our Fairly Valued rating on JPM. In the last week there has been no revisions made to earnings expectations, but our valuation has obviously been influenced by the decrease in price of 10.64%. While that price decrease has not caused an upgrade this week, we will continue to closely monitor the fundamentals in case a future change in rating is warranted. The complete fundamental analysis of JPM follows below.

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 1.14x and 0.71x respectively.

Notice that JPM’s current Price to Sales per share ratio is 1.05x, which is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective JPM does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 13% (the historical average) then we would become more positive on this stock.

JPM Cash Earnings

Looking at JPM specifically in their Cash Earnings capabilities, Ockham views JPM as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for JPM, the current level of Cash Earnings compared to its historical levels helps identify where JPM is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 12.74 and a historical low Cash Earnings per share ratio of 7.55, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for JPM? From the Ockham perspective, we are looking specifically at JPM to see if the market is recognizing the huge disparity between JPM’s past stock price to Cash Earnings ratio to today’s levels. At a difference of 25% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at JPM. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

JPM Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company’s inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from JPM against the historic high and low levels over an available data range. Because JPM has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In JPM’s case, the estimated annual dividend is $1.52 producing a current dividend yield of 6.16%. The highest dividend yield from JPM in recent history was 8.90% while the lowest dividend yield was 1.83%. A current dividend yield of 14.82% above the historical median is favorable in our analysis of JPM.

Peer Comparison

:

JPMorgan Chase & Company Industry Grouping

(2/19/2009)
Company Ticker Market Cap (Ml) Latest
Price		 Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate		 5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding JPM) 3.91 4.95 » 36.87 0.99 0.96 » 3.54 22.39% 14.55%
*10 year range does not include current year values
HSBC Holdings plc ADS HBC $84.5 Billion $35.19 4.61 6.87 » 27.68 1.01 1.28 » 3.16 28.90% 14.26%
JPMorgan Chase & Company JPM $76.9 Billion $20.60 7.66 6.16 » 67.25 1.05 0.70 » 2.74 21.82% 10.40%
Mitsubishi UFJ Financial Group, Inc. MTU $48.7 Billion $4.58 6.41 2.46 » 72.83 1.49 0.74 » 4.96 24.45% 8.37%
Banco Santander ADS STD $40.3 Billion $6.44 2.52 2.38 » 31.46 0.80 0.69 » 2.89 22.62% 12.36%
Wells Fargo & Company WFC $39.9 Billion $12.01 4.28 5.92 » 27.15 1.11 1.50 » 3.51 13.48% 18.30%
UBS AG Ordinary Shares UBS $31.0 Billion $10.58 1.76 7.13 » 25.25 0.52 0.60 » 3.21 22.52% 19.48%
Current
Rating on:
JPM
powered by Psydex

RazorWire™ & Community Discussion

Closing Bell
2/20/2009 4:16 PM
Closing Bell
All servicers can use that will make this possible for millions of americans around the country >> well, on thursday you said that the banks need to step up on foreclosures. JPMORGAN’s ceo jamie dimon was on cnbc yesterday. He told us that his bank would likely modify about 1 million is that the kind of effort and looking for, or does it go beyond that?
Closing Bell
2/20/2009 4:02 PM
Closing Bell
Come back a bit. Citigroup shares still breaking $2 a share at the close, down to 1.88 a share on citi. Bank of america down to $3.77 a share. JPMORGAN, goldman sachs, morgan stanley, general electric, all down sharply today. And earlier today we got word from trading desks that ken lewis, the ceo of bank of america, sent an internal
Countdown to the Closing Bell
2/20/2009 3:01 PM
Countdown to the Closing Bell
In fact, the white house saying that the best way to gor for banks is for hem to remain private. As you see, the main names in the dow jones/industrials, citi, bank of america, JPMORGAN, still down, but not as much as they had been. Here is morgan stanley with goldman sachs and wells at certain points in the day. They need to give them a
Squawk On The Street
2/20/2009 9:32 AM
Squawk On The Street
But there were people nibbling gold was the obvious one. Yesterday we saw commentary from barclays around buying oil service stocks as a replacement today we saw JPMORGAN upgrade the entire materials sector on a so there are people out there trying to pick stocks for where they might be performing in the next several months. Right now we’re opening to the
The Opening Bell on Fox Business
2/20/2009 9:31 AM
The Opening Bell on Fox Business
Left oppenheimer and starting her own firm and the pressure is on, and three names on the board are dow component and pressuring the dow, down nearly 100 point and bank of america down 12%, citigroup down nearly 12% and JP MORGAN down 6.2% and the other movers we are watching here today, we have goodyear tire and big name to watch and we’ll watch it because the largest u.S. Tire maker cut to a sell
Squawk On The Street
2/20/2009 9:03 AM
Squawk On The Street
But if you exclude the effects of currency sales would have been up 10%. A lot of companies are reporting problems with the final dollar. JPMORGAN upgraded the entire materials sector today. >> bob, we’ll be negative. I was just checking something on a particular stock, that’s why I wasn’t in the picture there.
Money For Breakfast
2/20/2009 8:07 AM
Money For Breakfast
On the notion the banks are going to be nationalized. If you look at the day in this foreclosure bill was announced, foreclosure measures were announced, when they started, bank of america, J.P. MORGAN, citibank and pnc are the four big banks that voluntarily suspended foreclosure a certain amount of time. Session. After it was over, after the
Squawk Box
2/20/2009 6:35 AM
Squawk Box
Squawk Box
This comment on the big guys go to zero and those who were relatively healthy at least see their dividend cut, which is what meredith whitney has been taig saying about JPMORGAN. >> if you wonder if things are going to look, they are indicated to open lower once again after some pretty significant drops yesterday, at least in percentage terms for
Fast Money
2/19/2009 5:06 PM
Fast Money
Fast Money
You and you just went through earnings season and you saw great numbers out of those two >> and no black boxes. >> it’s a relative value trade. Bet on — >> J.P. MORGAN’s earnings are under pressure, but buy the balance sheet and sell the balance sheet. Sell bank of america, this is the relative value play in this
Fast Money
2/19/2009 5:04 PM
Fast Money
Fast Money
Claims. The consumer is suffering and we’re seeing it will continue to weigh down on the good banks. The consumer exposure is >> is there a pointxd at which we should worry about J.P. MORGAN? >> when they got bear stearns almost a year ago, it seemed like such a coup. Next month it will be a year ago and matt, what a great sale that
Closing Bell
2/19/2009 4:21 PM
Closing Bell
She told me she would be a seller of some of these stocks even at the valuations that they currently are. She talked about citigroup at 2.50 aids share. She also gave me her thoughts on whether JPMORGAN will need to cut its dividends. >> citi to me is still the biggest risk position out there. I think there are companies that you know can’t earn their dividends and you know things are devolving. I don’t think any of the banks that I cover will continue to pay the existing dividends. I think JPMORGAN is in the same soup as every other bank and earnings pressure is going to be now, they are well capitalized. There’s no question about that. But it’s a question of earnings
Fox Business Bulls & Bears
2/19/2009 4:10 PM
Fox Business Bulls & Bears
The guidelines have changed from the servicers, including bank of america, wells fargo, country wide, J.P. MORGAN chase. They continue to tighten guidelines, so when you knock 21,000,000 out from being able to buy a home, it’s going to kill you.
Closing Bell
2/19/2009 3:40 PM
Closing Bell
Continue to overpromise and underdeliver, which is what you have here. >> is it fair to believe that some of these firms are going to try to rush and pay the tarp money, or is that unrealistic to believe? You know, there’s these reports that goldman sachs, JPMORGAN want to give the money back. >> anyone in their right mind would want to give the money back at quickly as possible. >> right. Of course. >> they could sell assets or expect that the capital markets
Closing Bell
2/19/2009 3:39 PM
Closing Bell
I think they’re a company that you know can’t earnedar earn their dividends and you know things are devolving. I don’t think any of the banks I cover will continue to pay their existing dividends. >> you’re talking the major banks, JPMORGAN, they’re going to cut their dividends? >> I think there’s going to be pressure. If JPMORGAN can get through this and maintain its dividend I would love to see it. I think JPMORGAN is in the same soup as every other bank and earnings pressure is going to be now, they are well capitalized. There’s no question about that. But it’s a question of earnings power.
Power Lunch
2/19/2009 1:02 PM
Power Lunch
On the flip side, the big banks appear to be on board. Of course, they have to be since any institution taking t.A.R.P. Money is required to participate. JPMORGAN’s jamie dimon called it elegant and wells fargo said they are supportive in spirit. Both say they will not write monthly payments. >> I would expect that term
Fox Business
2/19/2009 11:13 AM
Fox Business
Anybody going to whole foods market? 7% gains for them. — 37% gains for them. JPMORGAN raised them to a the groceries are doing well. Cbs, cvs and yrc, that one is higher as well.
Squawk On The Street
2/19/2009 10:06 AM
Squawk On The Street
Wrongs, where should we be what does it mean for your here with her thoughts, chief economist with JPMORGAN and john brady and our even steve liesman joins us as well. Anthony, do you think what you heard so far is going to appreciably help the economy? >> well, mark, I think there’s
The Opening Bell on Fox Business
2/19/2009 9:31 AM
The Opening Bell on Fox Business
Me washington speakers to another microphone because you can see here we are starting let’s look at JPMORGAN, bank of america and citibank guard dow components of the dow jones industrial average. You can also see some of the
Squawk Box
2/19/2009 8:42 AM
Squawk Box
Squawk Box
I mean, they’re all talking about it. Remember at the hearings last week, the grillings, the congressional grillings, they — they were talking about how they were all intending to pay it from what I hear inside JP MORGAN is dimon is more than he is looking at ways to do it. Now, it’s not easy to do. You might have to raise additional capital. I don’t know if can a wall street firm go out and raise
Squawk Box
2/19/2009 8:41 AM
Squawk Box
Squawk Box
>>> welcome back. Jamie dimon, JP MORGAN chief, trying to settle up with the that’s the word in charlie >> well, yeah.
Fast Money
2/18/2009 5:23 PM
Fast Money
Fast Money
>> the consumer credit exposure. >> exactly. >> and how about the exposure on the west coast, the biggest areas with the foreclosures and the defaults and everything else. >> doesn’t it apply to JPMORGAN? They had a huge credit card business. Bank one is in there. >> right, absolutely. Anyway — >> but it was already trading at >> how are you feeling on edge?
Fast Money
2/18/2009 5:23 PM
Fast Money
Fast Money
Are perceived to be good but are actually maybe not, of that >> not of that scale. You look at ub — yeah, u.S. Bank and that finally pulled back as well. >> you say JPMORGAN is vulnerable to it because its book value is already — >> it almost is. >> over the last two to three you see segregation that banks that are directly tethered to this consumer they are getting
Fast Money
2/18/2009 5:22 PM
Fast Money
Fast Money
I got corrected by one of the analysts, how do you know? We got to use something, whatever we got. The perceived book value that was trading well in a premium to that value and you look at JPMORGAN trading $10, $12 — >> the reason jp — the reason up until reason up until recently that JPMORGAN and wells fargo traded at premium relative to the peers bass because of no specific to wells fargo now they were thought to have fewer of the problems that the citigroups and bank of americas had and you look at the wells fargo chart and it looks like death. What happened? >> the reason I think is because of the fact that the perception is maybe they haven’t been able to avoid it. JPMORGAN took their medicine. They’re trading $15 underneath that perceived book value whereas you finally got the pullback out of wells fargo. A little bit of an evening out, dylan, you are finally getting the things pricing give or take
Closing Bell
2/18/2009 4:02 PM
Closing Bell
Plan. He also said they were planning to modify 600,000 mortgages and that that number could go as high as 1 million mortgages. Didn’t have a big effect on JPMORGAN’s stock, but nonetheless, it was widely discussed on the street. Most of the other bank stocks, some of the big names like fifth third are at multidecade lows at big decline there. Some of them in double digits
Closing Bell
2/18/2009 3:53 PM
Closing Bell
If we do it and i’ve spoken to several of the banks today and eye couple of the other big services do it, you’re talking about massive modifications around the whole country. >> dimon added that he thinks JPMORGAN could modify between 600,000 and 1 million loans. Dylan? >> warren buffett not the only billionaire making changes in his portfolio. We saw a whole stack of filings last night. Matt nesto looking through some of those filings.
Closing Bell
2/18/2009 3:53 PM
Closing Bell
Now we know goldman’s doing I hear morgan stanley’s in the one of the complicating issues here is if you take the tarp money, a lot of these people — I think JPMORGAN was forced upon do you have to raise capital if you give back the money. And that’s a question mark. And so if they have to raise capital they have to raise it when the markets are better. But i’m telling you, dylan, right now JPMORGAN wants to give back that money and there’s nothing better than that quote to explain why jamie dimon hates it so much. >> can’t blame him. Thank you, charles. >> less than an hour ago jamie dimon said president obama’s housing plan will have an immediate impath. >> we think the numbers for JPMORGAN alone will modify over can’t gef you a real number right now, but I wouldn’t be surprised if that number was a million because these new programs and incentives, both
Closing Bell
2/18/2009 3:52 PM
Closing Bell
Thinking I should raise my hand and say I will wire you back the tarp money if you let me leave and I guess they were all thinking that. Dimon was only half kidding. But JPMORGAN is exploring ways to give back the tarp money it’s unclear how he does it. But there’s no doubt that senior executives in the place aren’t just thinking about this, they have begun formal deliberations
Closing Bell
2/18/2009 3:51 PM
Closing Bell
We know goldman sachs has said they’re looking for ways to get the tarp money out of their accounts and back to the treasury accounts as soon as possible. Our on-air editor charlie another bank. What’s going on? >> it’s JPMORGAN CHASE, but I tell you, dylan, you should label this section — session hate the tarp money and hate all the congressional attention’s. If you take the tarp money and
Countdown to the Closing Bell
2/18/2009 3:36 PM
Countdown to the Closing Bell
In, it will filter in, but everybody is waiting for a turn around at some point the feeling still bearish you can banks, wells fargo, JPMORGAN, citibank of america, we were seeing for sale on bank of america here approaching market on close orders in the last 25 minutes of trading.
Closing Bell
2/18/2009 3:32 PM
Closing Bell
We knew it had broken 5 already but still it’s at $4.59 a share on b of a. Goldman is down 2 1/2%. JPMORGAN is down almost 2%. And a number of the others are really trading down, the banks once again the leadership group on the down side. Dow jones industrial average meanwhile for its part down 16. Nasdaq composite still holding tough and positive — no, nasdaq
Closing Bell
2/18/2009 3:03 PM
Closing Bell
Housing stocks are down here again today. Yes, the lower supply is good. The issue is the really weak demand is the other side of the equation. I’ll give you an example. Starts are down 79% from their this according to JPMORGAN. But the inventory of new homes for sale is only down 38%. In other words, the demand isn’t there right now, and it’s the the existing home sales.
Street Signs
2/18/2009 2:56 PM
Street Signs
>> if you don’t help out the speculators, which no one wants to at this point, does it put enough of a floor on the market if all of those homes go into foreclosure >> he think the numbers for JPMORGAN alone will modify over 600,000 loans. I can’t give you a number right now, but I wouldn’t be surprised if that number was a million because of the new incentives to the homeowners and servicers and
Street Signs
2/18/2009 2:37 PM
Street Signs
Back, could be bringing in traders, not necessarily investors that want to take these stocks to the grave with grandkids grandkids. Lastly, I mention JPMORGAN, it’s 20 on the s&p 500 by market cap, wells fargo is at $55 billion. It’s the second largest, citigroup is $15 billion.
Fox Business
2/18/2009 2:19 PM
Fox Business
Fidelity, first american, citi-, JPMORGAN we are watching these names as well, many down 5%. Here’s names in the news, wal-mart, sherman williams, mcdonald’s making news.
Power Lunch
2/18/2009 1:30 PM
Power Lunch
>> I have said from the is essential not to let JPMORGAN — your order gets executed, even when you’re busy. And with trailing stops to help you lock in profits and minimize risk, in your strategy,
The Call
2/18/2009 11:37 AM
The Call
The firm from going under. He took decisive measures and he makes a good case. >> jamie dimon same boat. >> I don’t know about that. Because I don’t think JPMORGAN was in the desperate shape >> it could have been much worse and they steered it in a better >> think about mack. He ran a company that lost a lot of money in the fourth quarter.
Mad Money
2/17/2009 6:43 PM
Mad Money
Mad Money
This is a special edition of "mad money." one of the things that — and whether you’re at capital one or whether you’re at american express or JPMORGAN, there’s models, everyone uses models, the models did go very wrong when it comes to housing, that you would not have
Mad Money
2/17/2009 6:02 PM
Mad Money
Mad Money
Similarly on the chin. Tim geithner is counting on them to pass the stress test. Didn’t pass monday’s stress test at all with JPMORGAN losing double digit decline. What is happening here? You have a couple of things. I could be doing this anchoring job in pretty much every country on earth tonight and I would be saying the same thing, the same
Fast Money
2/17/2009 5:03 PM
Fast Money
Fast Money
I think it’s about 8.29%, that was a huge jump, that was bode very poorly for capital ones of the world. JPMORGAN has a very big credit card exposure at this point, and so do the other banks. >> discover financial services. >> all these guys, axp, capitol
Countdown to the Closing Bell
2/17/2009 3:59 PM
Countdown to the Closing Bell
Not only was it the low but the five and a half year low. We are dipping lower. Citi and J.P. MORGAN with 1.5 million for sale. A.I.G. For sale. Key bank, a lot of banks still for sale.
View All JPMorgan Chase & Company Comments

Key Fundamentals

JPM – JPMorgan Chase & Company Fundamentals
Price (2/20/2009 4:00 PM) $19.90
Volume (2/20/2009 4:00 PM) 135.8 Million
10 Day Average Volume 73.7 Million
13 Week Price Range $17.70 – $37.70
52 Week Price Range $17.70 – $50.63
LTM Revenue $105.2 Billion
 
Shares Outstanding (12/2007) 3.7 Billion
Market Capitalization $76.9 Billion
Shares Held By Institutions 2.8 Billion
Institutional Holders 1,863
% Shares Held By Institutions 74.40%
Earnings Per Share (EPS) $4.38
P/E Ratio 10.20
Book Value Per Share $36.89
 
Gross Margin n/a%
Quarterly Dividend 1.52
Dividend Yield 7.40%
Beta 0.82
Fiscal Year Ends December