Is JPMorgan Chase Stock Undervalued or Overvalued Before Earnings?

jpmorgan chase stock jpmorgan chase earnings 2

By Rob Otman

JPMorgan Chase (NYSE: JPM) is a $333 billion company today. Investors that bought shares one year ago are sitting on a 45.77% total return. That’s above the S&P 500’s return of 19.66%.

JPMorgan Chase stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✓ Earnings-per-Share (EPS) Growth: JPMorgan Chase reported a recent EPS growth rate of 17.31%. That’s above the banking industry average of 14.38%. That’s a great sign. JPMorgan Chase’s earnings growth is outpacing that of its competitors.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the banking industry is 22.04. And JPMorgan Chase’s ratio comes in at 13.83. It’s trading at a better value than many of its competitors.

✓ Debt-to-Equity: The debt-to-equity ratio for JPMorgan Chase stock is 245.38%. That’s below the banking industry average of 321.87%. The company is less leveraged.

✗ Free Cash Flow per Share Growth: JPMorgan Chase’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✗ Profit Margins: The profit margin of JPMorgan Chase comes in at 27.6% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. JPMorgan Chase’s profit margin is below the banking average of 28.25%. So that’s a negative indicator for investors.

✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for JPMorgan Chase is 10.66%, and that’s below its industry average ROE of 11.58%.

JPMorgan Chase stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

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Source:: Investment You

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