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JPMorgan Chase & Co. (JPM), Citigroup Inc (C): A Dominant Force in the Financial World

A leading diversified financial institution, JPMorgan Chase & Co. (NYSE:JPM) has slightly outperformed the Dow Jones industrial average year-to-date, rising 15.8% compared to the 11.9% return offered by the blue-chip average.

JPMorgan Chase & Co (NYSE:JPM)

JPMorgan Chase & Co. (NYSE:JPM) is a leading diversified financial institution with major segments including: trading, retail banking, credit-card services, mortgage banking, commercial banking, treasury and securities services, advisory and underwriting services, asset management, and private equity. Based on market capitalization, the company is valued at $192.5 billion. Fundamentally, JPMorgan Chase & Co. (NYSE:JPM)’s business model is strong and profitable, with the company possessing a trailing-12 month profit margin of 23.8%.

With the company trading within $15 of all-time highs, should investors pour into this historic company or should they look elsewhere in the financial world?

Strengths:

  • Historic steady revenue growth: In 2000, JPMorgan Chase & Co. (NYSE:JPM) reported revenue of roughly $50 billion; in 2012, the company announced revenue of $97.0 billion, representing year-over-year annual growth of 5.7%, a trend that is anticipated to continue into the future with projections placing 2019 revenue at $132 billion. This growth has been a result of a major mergers and strong performance across all business segments.
  • Dividend: Currently, JPMorgan Chase & Co. (NYSE:JPM) pays out quarterly dividends of $0.30, which annualized puts the dividend as yielding 2.4%, exposing investors to the long-term benefits of dividends
  • Institutional vote of confidence: Nearly 70% of shares outstanding are held by institutional investors, displaying the confidence some of largest investors in the world have in the company and its future
  • Reasonable valuation: Presently, JPMorgan Chase & Co. (NYSE:JPM) carries a price-to-earnings ratio of 9.1, a price-to-book ratio of 1.0, and a price-to-sales ratio of 2.1; all of which indicate a company trading with a reasonable valuation providing investors with an attractive entry point
  • Diversification of business: JPMorgan possesses a large and diversified business, stretching across all major markets of the world and several distinct industries, and with this diversified characteristic comes a greater level of predictability and security for investors
  • Margin expansion: The company’s profit margin has expanded from roughly 15% in 2004 to the 26.0% level today; this trend of margin expansion means that JPMorgan keeps more of each dollar of revenue, translating into higher earnings for the company

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