With EPS Growth And More, JPMorgan Chase (NYSE:JPM) Makes An Interesting Case
It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.
So if this idea of high risk and high reward doesn’t suit, you might be more interested in profitable, growing companies, like JPMorgan Chase (NYSE:JPM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide JPMorgan Chase with the means to add long-term value to shareholders.
Check out our latest analysis for JPMorgan Chase
How Fast Is JPMorgan Chase Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, JPMorgan Chase has grown EPS by 6.9% per year. While that sort of growth rate isn’t anything to write home about, it does show the business is growing.
One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Our analysis has highlighted that JPMorgan Chase’s revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. EBIT margins for JPMorgan Chase remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 19% to US$161b. That’s progress.
The chart below shows how the company’s bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
earnings-and-revenue-history
You don’t drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for JPMorgan Chase’s future profits.
Are JPMorgan Chase Insiders Aligned With All Shareholders?
Since JPMorgan Chase has a market capitalisation of US$598b, we wouldn’t expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$2.2b. We note that this amounts to 0.4% of the company, which may be small owing to the sheer size of JPMorgan Chase but it’s still worth mentioning. This still shows shareholders there is a degree of alignment between management and themselves.
Story continues
Is JPMorgan Chase Worth Keeping An Eye On?
One important encouraging feature of JPMorgan Chase is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. The combination definitely favoured by investors so consider keeping the company on a watchlist. Don’t forget that there may still be risks. For instance, we’ve identified 2 warning signs for JPMorgan Chase (1 doesn’t sit too well with us) you should be aware of.
While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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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