JPMorgan Chase (JPM) Could Be 9% Undervalued After Dividend Hike And Buyback

Dividend hike and fresh capital moves put JPMorgan Chase in focus

JPMorgan Chase (JPM) has raised its quarterly dividend to US$1.65 per share and approved a US$50 billion buyback program, while continuing to tap bond markets with a series of new fixed income offerings.

Recent news has landed in a softer tape for JPMorgan Chase. The stock has slipped over the past month, with a 30 day share price return of down 5.29%, even as buybacks, a higher dividend and the new Qatar Investment Authority partnership have kept attention on the longer story. Over the past year, that short term pullback contrasts with a 9.75% total shareholder return, which includes reinvested dividends. This suggests that momentum has cooled but not reversed.

See how JPMorgan Chase compares with other large financials returning cash to shareholders by reviewing our hand picked 7 dividend fortresses.

Dividend growth, a new buyback and a recent pullback in JPMorgan Chase have created an entry point that does not look settled. Is this price already good enough, or is patience on valuation the better call?

Most Popular Narrative: 9% Undervalued

The most followed valuation view on JPMorgan Chase pins fair value at $370.39, compared with a last close of $337.53. This frames the recent weakness as a discount rather than a breakdown in conviction.

PMorgan is the best-run large bank in the world, a diversified "fortress balance sheet" spanning consumer, corporate, investment banking and asset management. It is my financial-sector anchor and a source of steady dividends.

See why 5 investors see JPMorgan Chase as 9% undervalued.

Result: Fair Value of $370.39 (UNDERVALUED)

Still, higher credit losses or tighter regulation could put pressure on returns and challenge the idea that JPMorgan Chase deserves a premium valuation.

Find out about the key risks to this JPMorgan Chase narrative.

Another View on JPMorgan Chase valuation

The first narrative on JPMorgan Chase leans on a user fair value of $370.39. A second lens, using our SWS DCF model, points to a future cash flow value of $492.27 at a share price of $337.53, which screens as undervalued. Which number should anchor your own work?

Look into how the SWS DCF model arrives at its fair value.

Next Steps

Mixed signals around JPMorgan Chase can feel confusing, and the only way to cut through that noise is to move fast and test the numbers yourself. You can balance both sides of the story by checking the 3 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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