JPMorgan Chase (JPM · NYSE)

Full report

1. Executive Summary

Key takeaways: At $342.08 the market pays for a return on tangible equity (ROTCE) of about 21% that lasts indefinitely. Our base case holds 21.5% in 2027 and lets it fade to 16% by 2036, which is still well above the 9.4% cost of equity. That path is worth $278 a share, and our probability-weighted value is $275 within a composite range of $270–335. The shares sit 2% above the top of that range, so the calibration rule treats them as fairly valued (label: Fair), but even our bull case ($326) is below the price.

This is our first report on JPMorgan Chase (report date 10 November 2026, data cutoff the 9 November close, US dollars), and it follows our event study of the same date. The bank is the strongest large US franchise: it earned a 20% ROTCE in 2025 and in the third quarter of 2026, grew loans 10.4% and deposits 9.1% over the year, and carries a 13.9% CET1 ratio (the common equity capital ratio regulators watch). We do not dispute near-term earnings, because our 2027 model earns about $25 a share against a consensus of $25.57. The disagreement is about how long a 20%-plus return lasts, and whether 9.4% is the right price for owning it. Our estimate of the implied cost of equity at today's price is 8.3%.

Our view: this is a high-quality bank at a full price, and the right action is to hold what is owned and add nothing. Our probability-weighted value is 20% below the price, and a payoff like that does not support new money.

Our intrinsic value view is Fair, our 1–3 month market trading direction is neutral to slightly lower, and our investment action is Watch: hold what is owned and add nothing.

The gap between what the price assumes and what we expect is set out below.

Over the next one to three months the market is most likely to trade the 2027 guide first. On 14 January JPMorgan gives its annual NII and expense outlook, and the two sharpest falls since January 2024 (January and April 2026, each about −4.5% against SPY) followed guidance disappointments. The sequence is the guide, then the card-cap and Basel headlines, then whether credit costs start to rise. The Q3 report already previewed 2027 NII excluding Markets at about $107B, so the bar is set.

The main bull and bear points are listed with what would disprove each.

2. Business Overview

JPMorgan is a diversified US bank holding company with $5.09T of assets, $1.58T of loans and $2.78T of deposits at 30 September 2026, run through four segments by 318,512 employees. Its profit comes mainly from the investment bank and the consumer bank, and the third quarter shows the mix without the one-off gains that lifted the second.

Consumer and Community Banking houses the branch network, cards (including the Apple Card portfolio JPMorgan agreed to buy, which drove a $2.2B reserve build in Q4 2025) and mortgages. The Commercial and Investment Bank covers markets, investment banking and treasury services, and it earns the most. Markets revenue reached a record $11.6B in the first quarter, and investment banking fees were $2.96B in Q3, up 13% on a year earlier. The Corporate segment holds the treasury and one-off items: it earned $4.2B in Q2 2026, mostly a Visa-related gain, and lost $0.5B in Q3 after $658M of securities losses.

Interest income is now the engine. Net interest income was $95.4B in 2025 and management guides about $106.2B for 2026 (up from $105.5B), with a preliminary 2027 central case of about $107B excluding Markets, which is roughly 10% above the 2026 figure of $97.2B. Investment banking and Markets revenues are cyclical and have been strong in 2026, so we treat them as a risk to the earnings base and not a floor.

3. Business and Competitive Analysis

JPMorgan's moat is scale in deposits, payments and capital markets, and the financial evidence supports a wide-moat rating. The test is the ratio of earnings power value to tangible book: our zero-growth earnings power value of $216 a share is 1.9 times tangible book of $112.64, and the ratio only reaches that level when returns exceed the cost of equity by a wide margin for a long time.

Competitive pressure comes from three places. Card and consumer lending face a political cap risk that is not in the numbers, and the January 2026 episode cost the stock 5.6% in two days. Investment banking competes with Goldman Sachs and Morgan Stanley, which trade at 2.3x and 2.6x book against JPMorgan's 2.5x. Regional and private-credit lenders compete on loans, and JPMorgan itself reports about $50B of exposure to private credit and about $160B to nonbank lending. The growth engines to test are NII excluding Markets and loan growth, and the evidence that would disprove the moat is a deposit beta (how much deposit costs rise when policy rates rise) above peers or ROTCE under 17% outside a credit cycle.

4. Management, Governance, and Capital Allocation

Management quality is high, but the transition risk is rising and capital has been returned at a price above our value. Jamie Dimon is chairman and CEO, and on 25 June 2026 the bank named Doug Petno and Troy Rohrbaugh co-presidents while Marianne Lake retired. Reuters-sourced reports say Dimon expects to stay about three more years and then become executive chairman, with a successor named within two to two-and-a-half years. Retention awards of $30M each went to the two co-presidents and $20M each to Jennifer Piepszak and Mary Erdoes. Insiders own 0.4% of the shares and institutions 75.6% (Yahoo Finance).

A weaker point is disclosure of adjustments. Reported EPS in three of the last four quarters differs from the figure the Street uses because of Apple Card reserves, a Visa gain or securities losses, and those items are repeating. Capital return slowed in the third quarter as management chose organic growth over buybacks, which we read as a sign of disciplined pricing, because repurchases at 3.0x tangible book add little to value per share at our estimates.

5. Financial Analysis and Earnings Quality

5.1 Five-year trend

Revenue has grown 50% in four years and net income 18%, because expenses and credit costs absorbed most of the increase. Operating leverage was positive in 2023 and 2024 and negative in 2025 and again in 2026, when expenses are guided up 13.6% against NII up 11%.

5.2 Bank KPIs

Growth is strong and credit is benign, but the quality of the margin matters more than its level. Net interest income rose 13% in Q3 mostly from Markets, and NII excluding Markets rose only 6%.

Credit and capital are sound by current standards, with one trend we flag: the allowance ratio is falling while loans grow.

We could not obtain the deposit beta, uninsured deposits, held-to-maturity unrealized losses, commercial real estate exposure, Level 3 assets or an eight-quarter trend, so the credit conclusion rests on three quarters of data and management's guidance. CET1 fell 90 basis points in a year, from 14.8% to 13.9%, as loans grew and buybacks continued.

5.3 Earnings credibility

We grade JPMorgan's earnings credibility B. Accrual ratios and the Beneish score do not apply to a bank, so we used the bank substitutes in our method: reserve behaviour, recurring adjustments, balance-sheet marks and governance.

6. Valuation

Key takeaways: We value JPMorgan on tangible book, ROTCE and the cost of equity, with a residual-income and zero-growth cross-check. The probability-weighted value is $275, the composite range is $270–335, and the price of $342.08 is 2% above its top end. The pre-registered rule labels that Fair because it allows a 15% buffer above the high end, but no method built on our assumptions reaches the price. We would need a cost of equity near 8.3% or a ROTCE above 20% for a decade.

6.1 What the price assumes

At 3.04x tangible book, a perpetual ROTCE of 21.4% is required at a 9.4% cost of equity and 3.5% growth. At 3.0% growth it is 22.4% and at 4.0% it is 20.4%. About 37% of the price pays for growth beyond a no-growth bank earning 18%, against $216 for the zero-growth value. In reverse-DCF terms the price needs distributable earnings to reach $66B a year from 2032, compared with $56B in our base case.

6.2 Valuation summary

The three main methods centre between $275 and $287, the peer P/E method at $337, and the two floor checks sit at $174 and $216, so no method built on our assumptions reaches the price. The scenario DCF and the tangible-book method carry the most weight, and the peer P/E method carries the least because the peers are lower-return banks.

Valuation football field, in summary: composite $270–335 vs price $342.08; DCF sensitivity $231–356 (base $278); scenarios $200–326 (weighted $275); P/TBV vs ROTCE $258–315; relative P/E $307–368; residual income $174 and earnings power value $216 as no-growth floors; Street targets $312–425, average $375. Source: ABiS valuation model; Robinhood (7–9 November 2026).

The table gives each range with its distance from the price and the weight we put on it.

6.3 Scenarios and sensitivity

Each scenario is a ten-year path for ROTCE and tangible equity growth, with distributable earnings equal to net income less the capital retained to grow. The bear case needs a credit cycle, the bull case needs the high returns to persist and capital rules to ease.

The bull case has medium evidence because ROTCE has been 20–22% for four years and NII guidance has been raised twice in 2026. The bear case has weak to medium evidence, because credit costs are benign but the allowance ratio is falling and Dimon warned in April that private credit losses will be larger than feared. At a 9.4% cost of equity the base value moves from $266 to $293 across terminal growth of 3–4%, and at 3.5% growth from $240 to $333 across a cost of equity of 10.4% to 8.4% (see appendix). The weights come from the evidence now, and the result does not depend on them.

A 40/50/10 bear-heavy mix gives $252 and a 10/50/40 bull-heavy mix gives $290, and both are below the price.

6.4 Calibration

The composite range is $270–335, and the price is 1.02 times the high end. The pre-registered rule says a price between 0.85 times the low end and 1.15 times the high end is Fair, and we apply it as written. The position module returns an expected return of −20%, an upside-to-downside ratio of zero and a quarter-Kelly size of zero, because the bull value is under the price. We do not rest the action on the label alone.

7. Analyst View Summary

The Street is more positive than we are, mostly on duration of returns. Of 31 analysts, 18 rate JPMorgan Buy and 13 Hold, with none at Sell. The average target is $375.04, 9.6% above the price, in a range of $312–425 (Robinhood, 7 November 2026). A Yahoo Finance average of $373.48 is consistent. Other averages we found, $342–359, date from the summer and are stale.

Consensus FY2026 EPS is $23.91 and FY2027 $25.57, up 6.9%. Over 90 days the FY2027 figure rose 2.5% from $24.95 while FY2026 slipped 0.9%, so estimates are shifting to 2027 NII. The Q4 2026 estimate is $5.77 (Robinhood) or $5.86 (Yahoo Finance), and the report is dated 14 January 2027. JPMorgan beat on six of the seven quarters reported since the first quarter of 2025, and the miss was the third quarter of 2026 ($5.75 against $5.94).

Our view: the Street's $375 target needs a cost of equity near 7.8% on our base path and a long hold on ROTCE above 20%. We agree with the Street on near-term earnings power and disagree with the value placed on the years after 2030.

8. Recent News and Catalysts

The last three months were dominated by the Q3 report, the leadership reshuffle and a volatile market. JPMorgan reported on 13 October with EPS of $5.57 ($5.75 excluding securities losses) against a $5.94 consensus, raised the 2026 NII guide and previewed 2027. It closed down 0.9% on the day. On 4 November the stock rose 4.2% and on 5 November it fell 4.2% as SPY fell 4.4%. The next test is the Q4 report.

8.1 Forecast register

Each forecast below is dated so it can be scored, and we will not edit it after publication.

9. Investment Conclusion, Counter-Case, and Position Sizing

Key takeaways: We rate the shares Fair on the pre-registered rule, expect a neutral to slightly lower path against SPY into and after 14 January, and recommend holding what is owned without adding. The price already pays for a 21% ROTCE that we expect to fade, and the probability-weighted return to our value is −20%. We would add below $300, or if the 2027 guide shows ROTCE staying at 21% or better.

9.1 Conclusion

The three judgments differ for good reasons. The intrinsic value view is Fair, because the price is within the 15% buffer of the range. Over one to three months we expect a neutral path: in the six earnings reports since January 2024 the median first-day move was 0.0% against SPY and the median 21-day move −1.4%, and the two falls near −4.5% followed guidance disappointments. The action is Watch, which means hold, add nothing and keep a pullback to $300 as the level for a new look.

We would not buy the shares with new money today, because the bull case of $326 is below the price and the next scheduled event can only confirm what is priced or disappoint.

9.2 Counter-case and pre-mortem

The first failure case attacks our core view directly: JPMorgan keeps earning 21% or more, so the shares reach the Street's $375 and our cautious stance costs money. This is the largest risk to the report and it has medium evidence.

The first case would change our action. A 2027 NII guide of $109B or more with expenses at or below $112B, and ROTCE guided at 21% or better, would raise the bull weight to 40% (with 45% base and 15% bear) and the weighted value to about $286. The price would still sit above it, but we would raise the range and reconsider the action. A price above $385, which is 1.15 times the top of our range, without a change in those inputs would move the label to Expensive.

9.3 Position sizing

The probability-weighted expected return is −20%. The upside to the bull value is below zero at today's price and the downside to the bear value is −41%, so the ratio is under 0.1 and the quarter-Kelly size is zero. We did not run a Monte Carlo, because the distribution depends on the scenario paths we already show. This is not an allocation recommendation.

9.4 Monitoring list

• 2027 NII ex-Markets guide against $107B (upside invalidation of our cautious view: $109B or more).
• 2027 expense guide against 2026's ~$108.6B (downside invalidation: growth above NII growth).
• Card NCO guide against 3.2% (downside invalidation: above 3.6%).
• CET1 against 13.9% (downside invalidation: below 13.0%).
• TBVPS growth against 6.6% a year (upside invalidation: above 10%).

9.5 Confidence

Appendix: supporting exhibits

Sources

JPMorganChase Form 10-K for fiscal 2025 and fiscal 2023 (SEC XBRL facts via Robinhood, retrieved 9 November 2026); JPMorganChase Q3 2026 earnings release supplement and 8-K (SEC, 13 October 2026); JPMorganChase Q4 2025 release (13 January 2026); Robinhood quotes, fundamentals, earnings calendar and analyst ratings (7–9 November 2026); Yahoo Finance estimates, beta and short interest (9 November 2026); US Treasury 10-year yield via Yahoo Finance (4.86%, 9 November 2026); TradingNews and Beancount (October 2026 Q3 summaries); Reuters, Business Standard and Outlook Business (June 2026 leadership changes); Axios, Irish Times and American Banker (April 2026 private credit); Orrick and Deloitte (March 2026 Basel re-proposal); Federal Reserve stress test coverage (June 2026); Bloomberg via The Star (June 2026 buyback); Marketscreener and Kitco (January 2026 card-rate cap); Damodaran implied ERP range via BV Resources (secondary); ABiS event study, 10 November 2026. This report applies the banks industry appendix.