JPMorgan Earnings: Fundamentals Remain Robust, but Expectations Are a Bit Too Optimistic

Key Morningstar Metrics for JPMorgan Chase

• Fair Value Estimate: $178.00
• Morningstar Rating: ★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of JPMorgan Chase’s Earnings

JPMorgan’s fundamental performance remains rock solid, as it reported fourth-quarter earnings of $4.81 per share, equating to an annualized return on tangible equity of 21%. The bank’s 2025 guidance was also decent, but we are concerned about its valuation, as future expectations are overly optimistic.

Why it matters: Profitability was powered by solid net interest income, investment banking recovery, continued outperformance in trading, and buoyant asset valuations helping asset-management fees. Macroeconomic parameters also look robust, improving the outlook for loan growth and credit costs.

• Bank stocks traded at healthy valuations even before the US presidential election and have rallied further since then. In our opinion, banks can benefit from some of the announced policies of the incoming administration, but the overall impact remains uncertain.
• The bank guided for $94 billion in NII for 2025, as the impact of rate cuts is expected to be partially offset by higher credit card and deposit balances. This is encouraging, but the expense guidance of $95 billion was slightly higher than our expectations.

The bottom line: We plan on increasing our $178 per share fair value estimate for JPMorgan by a high-single-digit percentage after incorporating fourth-quarter results. We continue to believe shares are overvalued.

• We estimate that about half of the increase in our fair value estimate can be attributed to the time value of money, with the other half resulting from high loan growth expectations, faster recovery in investment banking, continued strength in asset management, and lower capital requirements.
• The bank can enjoy elevated profitability for a few more quarters, but our overall thesis on the bank remains unchanged, and we continue to believe the recent super-high profitability can’t be maintained in the long run.