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  • Writer's pictureIshfaaq Peerally

JPMorgan Chase 4Q21 Earnings Analysis

JPM Stock Analysis

Business Description:

JPM Stock Analysis

  • Massive increase in deposits YoY mostly from Increase in Federal Reserve System balance sheet

  • Increase in net income from release of reserves for credit losses of $1.8 billion in 4Q21

JPM Stock Analysis


  • Economic recovery in the US and around the World

  • Rising interest rates


  • Zero interest rates, QE and banking regulations (Dodd-Frank Act of 2011) makes makes it harder for banks to do business

  • Increased investments of $15 billion in 2022

Financial Analysis:

JPM Stock Analysis


  • My personal Biases

    • 5.2% of my portfolio, buying since 2016

    • Likes management

  • Assumptions

    • Net income of $36.0 Billion for FY22 without release of credit losses and with increased investments

    • Net income falls increasing by 4% annually

    • Discount Rate of 10% for the next 5 years

    • Terminal Growth rate of 2%

JPM Stock Analysis

  • Exit Multiples Analysis

    • Based on Tangible Book value in 2026

    • 2% annual increase in book value for base case (2.3% in last 5 years)

    • 2.3% for bull case and 1.8% for bear case

    • 4% of tangible book value paid in dividends every year (average for last 5 years)

    • 15% of shares outstanding bought back over next 5 years in base case, 20% in bull case and 10% in bear case

    • Price to Tangible book value per share ranged from 1.2 to 2.3 in last 5 years, currently at 2.3, expected to rise if interest rates rises

JPM Stock Analysis

JPM Stock Analysis


  • Stock undervalued but future returns not expected to be much at current price

  • Good hedge against rising interest rates

  • Good stock to hold long-term

JPM Stock Analysis

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