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JPMorgan Class A & Co (JPM) Extended Graph Analysis

July 15th, 2020 Posted by Extended Analysis No Comment yet

Company Profile

JPM logo

JPMorgan Chase & Co. is the oldest and largest  financial institution and a multinational investment bank. Headquartered in New York, New York, United States. The company was founded on December 1, 2000 by AAron Burr and incorporated in Delaware. The company is a provider of multiple investment banking and financial services.

JPMorgan chase & Co. is traded as NYSE:JPM, its predecessor was Bank of the Manhattan Company which was founded in September 1, 1799

JPMorgan Chase & Co (JPM) Extended Graph Analysis

 

1. JPM Cash Flow

JPM CASH FLOW

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 73,466,000,000 20,196,000,000 -2,501,000,000 14,187,000,000 6,046,000,000 -33,846,000,000
Net cash used for investing activities 106,980,000,000 -114,949,000,000 -10,283,000,000 -197,993,000,000 -54,013,000,000 -225,464,000,000
Net cash provided by (used for) financing activities -187,511,000,000 98,271,000,000 14,642,000,000 34,158,000,000 32,987,000,000 325,857,000,000
Capital expenditure -77,008,000,000 -124,102,000,000 -107,658,000,000 -104,459,000,000 -255,576,000,000 -354,142,000,000
Free cash flow 73,466,000,000 20,196,000,000 -2,501,000,000 14,187,000,000 6,046,000,000 -33,846,000,000

Facts:

  • Net cash from operating activities was -$33.846 billion in 2020 trailing twelve months.
  • Net cash from investing activities was -$225.464 billion in 2020 trailing twelve months.
  • Cash provided by (used for) financing activities was $325857 billion in 2020 trailing twelve months.
  • Capital expenditures were -$354.142 billion in 2020 trailing twelve months.
  • Free cash flow was -$33.846 billion in 2020 trailing twelve months.

Explanation

  • Cash from operating activities was negative due to the impact of a significant amount of accounts receivable.
  • Net cash used for investing activities was purchases of property, plant and equipment and other investing activities..
  • Net cash provided by (used for) financing activities was preferred stock issued, common stock repurchased, dividends payments and a significant amount of other financing activities.
  • Capital expenditures were purchases of property, plant and equipment.
  • Free cash flow was erratic in movement in the last five years and has a negative amount in the trailing twelve months due to negative cash from operations.

Interpretations

The company was not efficient in generating cash from operations in 2020 trailing twelve months due to a decrease in net income by 18 percent from 2019. Free cash flow was negative as well due to negative cash from operations.

2. JPM BALANCE SHEET

JPM BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 20,490,000,000 23,870,000,000 25,900,000,000 22,320,000,000 21,700,000,000
Net property, plant and equipment 14,360,000,000 14,130,000,000 14,160,000,000 14,930,000,000 25,818,000,000
Total assets 2,370,000,000,000 2,490,000,000,000 2,530,000,000,000 2,620,000,000,000 2,690,000,000,000
Total liabilities 2,120,000,000,000 0 2,280,000,000,000 2,370,000,000,000 2,430,000,000,000
Retained earnings 146,420,000,000 162,440,000,000 177,680,000,000 199,200,000,000 223,210,000,000
Stockholders equity 247,570,000,000 254,190,000,000 255,690,000,000 256,520,000,000 261,320,000,000

Facts:

  • Total cash was $21.7 billion in 2019.
  • Net property, plant and equipment was $26 billion in 2019.
  • Total assets were $2.690 trillion in 2019.
  • Total liabilities were $2.430 trillion in 2019.
  • Retained earnings was $223 billion in 2019
  • Stockholders equity was $261 billion in 2019.

Explanation

  • Total cash represents 0.81 percent of the total assets.
  • Net property, plant and equipment represent 1 percent of the total assets.
  • Total assets have a growth of 14 percent in five years.
  • Total liabilities represents 90 percent of the total liabilities and stockholders equity.
  • Retained earnings represents 85 percent of total equity.
  • Stockholders equity represents 10 percent of the total liabilities and equity.

Interpretation

The company is highly leveraged, it uses more of creditors money than the investors investment in equity. In other terms, the creditors have more stake in the company.

3. JPM INCOME AND MARKET

JPM INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 93,543,000,000 95,668,000,000 99,624,000,000 109,029,000,000 115,627,000,000 114,755,000,000
Net Income 24,442,000,000 24,733,000,000 22,778,000,000 30,923,000,000 34,844,000,000 28,483,000,000
Market Capitalization 241,899,000,000 308,768,000,000 371,052,000,000 319,780,000,000 429,913,000,000 296,506,000,000
Intrinsic Value 303,298,000,000 403,087,000,000 839,971,000,000 707,132,000,000 973,461,000,000 778,154,000,000

Facts

  • Revenue was $115 billion in 2020 trailing twelve months.
  • Net income was $28 billion in 2020 trailing twelve months
  • Market capitalization was $295.506 billion in 2020 trailing twelve months.
  • Intrinsic value was $778 billion in 2020 trailing twelve months.

Explanation

  • Revenue grew 23 percent in five years.
  • Net income grew 17 percent in five years.
  • Market capitalization was lesser by 31 percent against intrinsic value from 2019 to the trailing twelve months.
  • Intrinsic value was higher than market capitalization meaning the stock price of JPM was undervalued.

Interpretation

Net income represents 25 percent of the revenue. The company’s income statement does show any negative bottom line in the last five years.

4. JPM FINANCIAL RATIOS

JPM FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 0.03 0.04 0.04 0.04 0.04 0.04
Return on assets % 0.91 0.93 0.90 1.19 1.30 0.96
Return on equity % 10.34 10.05 9.86 13.35 14.91 12.21
Debt/Equity 1.30 1.29 1.24 1.22 1.24 1.29

Facts

  • Asset turnover was averaging 0.04 in 2020 trailing twelve months.
  • Return on assets was 0.96 percent in 2020 trailing twelve months.
  • Return on equity was 12.21 percent in 2020 trailing twelve months.
  • Debt/Equity ratio was 1.29 in 2020 trailing twelve months.

Explanation

  • Asset turnover indicates that for every dollar in assets, the company generated .04 cents of sales which is not very efficient in using its assets.
  • Return on assets indicted that for every $1 invested in assets it generated 0.96 cents of net income.
  • Return on equity indicates that for every dollar invested in equity it generated 12 cents in profit.
  • Debt/Equity ratio indicates that for every dollar invested in equity the company has $1.29 in debt. Debt level is 129 percent of equity.

Interpretation

Financial ratios show that the management was not very efficient in generating a return on the investment made.The company is highly leveraged.

5. JPM KEY EXECUTIVE COMPENSATION

JPM KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Salary 9,884,250 11,303,234 11,998,628 12,026,026 12,655,889
Bonus 16,000,000 17,000,000 25,300,000 27,100,000 31,373,333
Annual Other Income 0 0 0 0 0
Restricted Stock Award 35,684,204 48,615,750 61,146,766 66,211,372 74,673,974
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 961,291 357,786 427,581 648,889 708,657
Total 62,529,873 77,340,235 98,947,621 106,004,281 119,556,090
James S Dimon, Chairman of the Board and CEO
Salary 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Bonus 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Annual Other Income 0 0 0 0 0
Restricted Stock Award 11,100,000 20,500,000 21,500,000 23,000,000 24,500,000
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 621,060 205,551 286,228 519,840 578,246
Total 18,230,313 27,236,892 28,321,737 30,033,745 31,612,616
Gordon A. Smith, Co-President and Co-COO, CEO of Consumer and Community Banking
Salary 750,000 750,000 750,000
Bonus 7,700,000 8,500,000 8,700,000
Annual Other Income 0 0 0
Restricted Stock Award 10,950,000 11,550,000 12,750,000
Securities Options 0 0 0
LTIP Payout 0 0 0
Non-Equity Compensation 0 0 0
Other Compensation 0 0 0
Total 19,405,985 20,804,089 22,209,071
Daniel Pinto, Co-President, Co-Chief Operating Officer, CEO of the Corporate and Investment Bank
Salary 6,884,250 8,303,234 8,238,628 8,276,026 8,239,222
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 9,584,204 11,615,750 10,696,766 12,761,372 13,723,974
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 217,881 103,640 80,384 68,548 72,246
Total 16,687,210 20,022,624 19,015,778 21,105,946 22,035,442
Mary Callahan Erdoes, CEO, Asset and Wealth Management
Salary 750,000 750,000 750,000 750,000 750,000
Bonus 6,900,000 7,300,000 7,500,000 7,900,000 8,100,000
Annual Other Income 0 0 0 0 0
Restricted Stock Award 9,450,000 10,330,000 10,950,000 11,250,000 11,850,000
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 0 0 0 0 0
Total 17,100,000 18,432,124 19,242,152 19,900,000 20,754,269
Marianne Lake, CEO, Consumer Lending
Salary 750,000 750,000 750,000 750,000 750,000
Bonus 4,100,000 4,700,000 5,100,000 5,700,000 4,840,000
Annual Other Income 0 0 0 0 0
Restricted Stock Award 5,550,000 6,150,000 7,050,000 7,650,000 8,550,000
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 0 0 0 0 0
Other Compensation 112,350 48,595 60,969 60,501 58,165
Total 10,512,350 11,648,595 12,960,969 14,160,501 15,198,165
Jennifer A. Piepzak, CFO
Salary 666,667
Bonus 3,733,333
Annual Other Income 0
Restricted Stock Award 3,300,000
Securities Options 0
LTIP Payout 0
Non-Equity Compensation 0
Other Compensation 0
Total 7,746,527

Facts:

  • Total key executive compensation was $62,529,873 in 2015.
  • Total key executive compensation in 2016 was $77,340,235.
  • Key executive compensation 2017 was $98,947,621.
  • Key executive compensation in 2018 was $106,004,281.
  • Executive compensation in 2019 was $119,556,090.

Explanation

  • Total key executive compensation represents 0.32 percent of the net income in 2019.
  • Total compensation of James S Dimon, Chairman of the Board and CEO represents 26 percent of the total key executive compensation.
  • Compensation of Gordon A. Smith, Co-President and Co-COO, CEO of Consumer and Community Banking represents 19 percent of the total compensation.
  • ‘Compensation of Daniel Pinto, Co-President, Co-Chief Operating Officer, CEO of the Corporate and Investment Bank represents 18 percent of the total key executive compensation.
  • The compensation of Mary Callahan Erdoes, CEO, Asset and Wealth Management represents 17 percent of the total compensation.
  • The compensation of Marianne Lake, CEO, Consumer Lending represents 13 percent of the key executive compensation.
  • Compensation of Jennifer A. Piepzak, CFO represents 6 percent of the total compensation.

Interpretation

The total key executive compensation was less than one percent of the total net income in 2019. 

6. JPM LOBBYING AND CONTRIBUTIONS

JPM LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
1999 $600,000
2000 $2,910,000
2001 $6,300,000
2002 $4,700,000
2003 $6,710,000
2004 $4,080,000
2005 $3,640,000
2006 $6,120,000
2007 $6,460,000
2008 $5,930,000
2009 $6,170,000
2010 $7,410,000
2011 $7,620,000
2012 $8,060,000
2013 $5,460,000
2014 $6,280,000
2015 $3,590,000
2016 $2,920,000
2017 $2,990,000
2018 $2,970,000
2019 $2,810,000
2020 $1,944,507

Facts:

  • JPMorgan is incurring lobbying and contributions expenditures since 2011 to politicians.

Explanation:

A note from OpenSecret.org Center for Responsive Politics, quoted below:

“Contributions to 527s are not included in the Individuals, PACs, Soft (Indivs), or Soft (Orgs) columns, so the sum of these columns may not equal the Total column.

The numbers on this page are based on contributions of $200 or more from PACs and individuals to federal candidates and from PAC, individual and soft money donors to political parties, as reported to the Federal Election Commission. While election cycles are shown in charts as 1996, 1998, 2000 etc. they actually represent two-year periods. For example, the 2002 election cycle runs from January 1, 2001 to December 2002.

Soft money contributions were not publicly disclosed until the 1991-92 election cycle. Soft money donations to parties were banned after the 2002 cycle.

Data for the current election cycle was released by the Federal Election Commission on June 22, 2020.”

Interpretation

Lobbying and contributions to politicians vary every cycle; it may increase or decrease in amount depending on the attention given by the federal government on the issues of the company.

Overview

The net margin was good at 25 percent in the trailing twelve months, it has diversity income streams. The company uses more resources from creditors than from the investor’s investment in equity. In other terms, the creditors have more stake than the investors.  The stock price of JPM was undervalued up to the point of writing and posting to websites.

CITATION

https://www.jpmorganchase.com/

https://www.morningstar.com/stocks/xnys/jpm/quote

https://www.opensecrets.org/orgs/summary?id=D000000103

Researched and written by Criselda

 

Note:

Research Reports can be found under the company tab.