Company Profile

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

	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

	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

	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

	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

	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

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