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over the past year shares of JP Morgan are up 50% that performance beats companies like apple Amazon Microsoft and Google that is what has me so excited to be talking about stocks like JPM is I feel like sometimes the market somewhat ignores this now full disclosure I've been invested in JP Morgan for a while and we'll have to have discussions on today's show is the valuation over at JP Morgan is it getting a little stretched when we look at tangible Book value we'll look at that from a historical perspective from the company we'll also have to look at this one technically as well it certainly looks like it is stretch can you take profits on JPM are there areas if this stock were to pull back is there areas where you can step in we'll discuss that in the context of the company announcing their queue for earnings of course we'll go through the earnings now whether or not you're interested in JP Morgan really makes no difference this is a company you should pay attention to because basically every company every consumer that you know has an account or has a touch point with JPM whether it's a credit card a home loan or a checking account this company touches it all so we'll get a look into the consumer also the business as well as they've got a big banking business as relates to commercial side so we'll look at all of those things as it relates to JPM see how things are going and see some of the reasons why again over the past year Shares are up over 50% now the company has certainly benefited from the Tailwinds of higher interest rates and that has benefited the company from a net interest income standpoint we look at that here in a moment but Revenue just looking absolutely spectacular 43.74 billion that was 13.4% growth year-over-year and again this is why you can't ignore certain stocks this 133% growth rate just off the top of my head that is beating Apple that is beating Amazon that is beating Microsoft that is beating Google in a lot of cases beating a lot of stocks so this company also beat Expectations by over $2 billion company is just flying high on all cylinders now it's expected to cool off in the coming quarters expected maybe single digit growth maybe even some negative Revenue growth and that is what we'll talk about when we talk about how overe extended this stock is both from a technical standpoint but also from a valuation standpoint we'll have to talk about both of those things but a number that we're looking at again this is kind of AO BR brace view is everybody's kind of expecting the consumer and the United States economy to eventually fall off a cliff based on the inflation rate and all those types of things that we had and one way to look at it number one is employment if an unemployment rate meaningfully ticks up we're all screwed as investors I mean the market will have a dramatic drop we've seen that before during the great financial crisis and during other times that is a fact right now we're not seeing it the other thing that we're not seeing is at least on credit card yes we're seen the revolving balance continue to tick up but charge offs continue to hold steady and what we do with charge offs on the credit card side is that we actually compare them to pre pandemic because obviously the government made it rain during the pandemic and just splash down PPP loans all this types of stuff on the economy and so obviously naturally credit card defaults started to go lower including a lot of revolving balances so what we do is we pull a number from December of 19 before the world fell apart when it comes to government spending stimuluses and obviously the pandemic I said stimuluses I don't even think that's a word but we had well under a 1.3 or we had a 1.13% charge off rate in December of 2019 right now the charge off rate is still below 1% in fact it's down below 9.9% so we're at 84% 87% terms of delinquency rates on their Trace credit cards company's probably doing a better job from a risk management perspective but also again we're just seeing consumers not default and charge off on these credit cards and that's obviously a good sign for the economy now not so good over at JP Morgan is this valuation you obviously have this outperformance it's outperforming tech companies its Revenue growth is outperforming many many sectors and so the valuation over at JP Morgan has ballooned now one valuation metric that you can look at when it comes to Banks is what's called a tangible book value per share the companies tend to give this to you inside of their quarterly financials there's also ways to calculate this on the financial sites as well what I like to do is I like to take tangible Book value from a company and I like to compare it to itself in this case JP Morgan is getting way over an extended we're trading two and a half times even excess of that to tangible book which means right now the tangible Book value at JP Morgan is 9730 and shares are currently trading at over 250 times that's over 2.5 times the tangible book if you were to liquidate JP Morgan right now and just get rid of all of the assets company would only have $97 per share currently you're an investor you're paying $252 and so you have to start to look forward there are reasons to pay premium number one is revenue growth rate going forward number two is some of these trends that we see on the credit card side but more or less you're paying for forward revenues to continue to churn out now obviously JP Morgan's just a well-run bank it deserves to traded at premium and you've seen over the past several years usually trades 1.5 maybe two times tangible book were certainly OV extended there it mirrors what we're seeing on the stock chart as well so talk about all of those types of things now from a financial perspective there's a reason why you're trading at over two and a half times book that is because net income ballooned to over 14 billion in the most recent period that is not only up 9% from the previous quarter folks that was up 55% year-over-year on that income that's on higher revenues by about 11% but what the company did a very nice job is is control these non-interest expense notice those actually went down by 7% year-over-year yeah they drew higher revenue on Lower expens expenses over at JPM driving these massive profits now when we look at the different segments it does paint a somewhat different story between the consumer and business when we look at the consumer things are pretty good net revenue basically flat year-over-year to about $18.4 billion when you factor in all the costs what was I thought was interesting is your Banking and wealth management that was actually down and we'll talk about some of the things that JP Morgan talked on the conference call as it relates to Growing their wealth management business we talk about that here in a moment but I was surprised home lending up 12% I know with home R you know home prices continue to rise obviously the interest rates haven't dropped really at all that is driving some of this but it's interesting people are still stepping out and you know doing those Home Loans the card services and the automobile loans those also up 14% year over-year so people continue to be employed and as long as they are employed they're going to feel comfortable making home payments servicing credit card debt also buying a new car when they feel like it so as long as unemployment stays where it's at this stock will probably continue to do well non-interest expenses is all your employees expenses interesting aspect here is your provision for credit losses so the company is setting aside these Provisions for credit losses just in case some consumers decide not to pay on their loan and the more JP Morgan sets aside and more it makes us as an investors and people that like to analyze these things and connect the dots the more they're setting aside the more worried they are about the future and it was up 20% although it was down quarter over quarter by about 6% from 2.8 billion down to 2.6 but again elevated over the last year but more or less staying relatively steady which also is a good thing when you come over to the Commercial Banking side of things revenues were up big up 18% what was interesting is different from the consumer side is we actually see very few Provisions for credit losses so business business look to be very healthy at least the ones that JP Morgan is dealing with that ballooned your net income up 59% from 4.2 billion up to $6.6 billion this is not for the whole company this is just for the commercial in Investment Banking now one thing that they did point out on the conference call somebody asked actually a really good question and hey where are some opportunities for JP Morgan to grow because obviously as we start looking at Revenue estimates they're starting to flatten out as we look into future quarters one thing that they pointed out was the mergers in acquisition or the m&a market spurring some activity there obviously maybe slightly less regulation under the Trump Administration and more activity from companies buying other companies that could generate some Revenue now we just look at the commercial business now we look at asset and wealth management and this is one thing that the company pointed to on the conference call that they feel like they need to do a much better job at they say we have penetration with all of our high net worth individuals we have credit cards with them some of them might have other loans with us but what they don't do is manage a lot of their wealth those clients might go to a Goldman Sachs or one of these other investment Banks and so they felt like with wealth management they could grow with high net worth individuals how they do that how they pull them from these other firms we'll see but look net revenue up 133% year-over-year your net income up 25% all in all when you look at the total corporate wide growth both on the revenue side and the profit side and the different segments this is JP Morgan at its absolute finest I mean this is absolutely As Good As It Gets and it's being rewarded at least from a shareholder perspective couple other notes of the conference call with JP Morgan Jamie Diamond plans to only last maybe a couple of more years in fact he talked openly about it on the conference call that they're already kind of planning for that type of thing and it looks like maybe he has three or four more years at the bank the other thing that he didn't want to do was give a special dividend when you look at these absolutely Sensational results they are paying you a125 per share common dividends came in at $3.5 billion this company continues to buy back stock as well to the tune of $4 billion the company could jack this up even more but they are not going to do a special dividend he said it doesn't create shareholder value and that shareholders didn't want it my guess is they'll just continue to drive up this dividend and continue to buy back shares which again at the current time are way overextended I wouldn't blame any investor if you were like me and you've bought JPM multiple times over the past few years for under $100 per share this could be an area where you reallocate and that is totally fine I also don't blame any investor to just want to continue to ride this one out and continue to hold yes you are likely to have pullbacks in JP Morgan shorter term long-term intermediate term you will have pullbacks on this one depending on how steep and how quickly they materialize might not be much lower than the current share price this is not an area where I would be actively accumulating shares of JP Morgan if you miss the boat if you miss the one-year returns even the five-year returns are pretty decent over here just want to have this one on your radar so when that time comes again you can step in because these high quality companies that a lot of investors tend to ignore can have outperformance in the short term especially if you get them at the right price that's exactly what we'll be doing over at blue chip stock investor launching relatively soon be analyzing companies like JP Morgan like this I'll also be giving you kind of a full readout and a full report every time these companies report earnings so you'll not only get a video but you'll get a report like this as well I'll summarize the conference call summarize the quarter both on a video and in written form so you know exactly what's going on with JP Morgan not only that but when you pull back to these areas of buying opportunities I'll be there alerting you so I'll be your eyes and ears I'll be your analyst and that's what's coming here relatively soon hopefully you guys enjoyed today's video I'll be back again later today with more good luck with your Investments
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