The article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

JPM Stock Analysis

Summary

JPM Stock Analysis

I Know First Algorithm Bullish Forecast For JPM

JPM Stock Analysis

JPMorgan Chase & Co. (JPM) is a financial holding company, which provides financial and investment banking services. It offers a range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure; capital-raising in equity and debt markets; sophisticated risk management; market-making in cash securities and derivative instruments; and prime brokerage and research. It also offers investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. The company operates its business through the following segments: Consumer and Community Banking; Corporate and Investment Bank; Commercial Banking; and Asset Management. The company was founded in 1968 and is headquartered in New York, NY.

JPM is currently dominating in the market where it has risen to $87.23 per share. This price is the highest the stock has ever been since it began public trading in 1983. This is happening even before President Elect Trump is sworn into office. The reason this is important is because of Trump’s vow of creating jobs and increasing business potential. Once he is in office, the banks, especially JPM, will benefit heavily. JPM is a great dividend stock as it pays $0.48 per share, per quarter. Each year the dividend is evaluated and since 2009, the dividend has increased 247%. The price target for JPM stock is $91.72, which is only about 5% above the current share price. If JPM reaches the price target, then the company will be worth about $330 billion.

JPM’s quarterly report is set to be released on January 13, 2017 and it is expected that earnings price per share will increase $1.40 which is up 3.7% ($0.05) from last years $1.35 per share. Expected profits will be about $5.04 billion if EPS reaches $1.40. There are currently 23 analysts covering JPM with 13 analysts giving JPM a buy rating, 2 giving JPM a sell and 8 rate the stock as hold.

The 2009 recession caused by the 2008 housing crash completely decimated banks and businesses, however; JPM overcame the mound of issues and even came out stronger. The bank is much better positioned in the market than it ever has been, using the downfalls in 2009 to build a stronger foundation on which to grow. Since 2008, JPM has reduced their net loss provision, also known as the loan loss provision. This factor plays a large roll in JPM’s balance sheet as it is a large sum of money put aside by the bank to guard against potential loan loss and default on loans. This means that whatever money they had to keep aside can now be used to increase business prospects, which will ultimately grow the company further. This has also allowed JPM to begin share buybacks and in 2016 JPM board members approved a $10.6 billion buyback.

In 2017, JPMorgan is estimated to top any expectations because of Trump as briefly discussed above. The reason being that the business environment when he comes into office, will be much better. Not only will this affect how JPM is run, but also how other businesses run, ultimately working in favor of banks in general. Banks make up a large portion of loan opportunities for businesses, if smaller, or even larger, businesses turn to JPM for their business dealings, including loans, then that will put JPM on a positive course for years to come.

Because JPM is a bank, most of its dealing is on loans, which includes interest rates. Currently, the interest rates have gone up, which will inevitably strengthen JPM because it creates a larger profit margin for the bank, thus benefitting their bottom line. This may not be favorable for consumers, but for financial institutions like JPM, it will benefit immensely. More information about the increase in interest rates can be found here.

I Know First Algorithm Bullish Forecast For JPM

I Know First currently maintains a bullish stance on JPM with signal strength 143.34 and predictability 0.63 for 1 year forecast.

In the past I Know First was also bullish on JPM. This bullish forecast on JPM was sent to current I Know First subscribers on August 22, 2014, where JPM had a signal of 4.23 and a predictability of 0.46. JPM showed returns of 11.61% for one year.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Conclusion

JPMorgan will be a winner in 2017 and right now would be the time to buy the stock as it is at its low for the incoming year based on predictability and the increase in interest rates. In general, JPM is a solid stock to have in a portfolio.