Intrinsic value of JPMorgan Chase - JPM

Previous Close

$114.77

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$114.77

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as JPM.

We calculate the intrinsic value of JPM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 407.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
Revenue, $m
  103,709
  108,054
  112,669
  117,563
  122,747
  128,232
  134,030
  140,155
  146,620
  153,440
  160,630
  168,208
  176,191
  184,597
  193,447
  202,761
  212,561
  222,870
  233,712
  245,114
  257,101
  269,703
  282,949
  296,871
  311,501
  326,875
  343,029
  360,001
  377,831
  396,562
Variable operating expenses, $m
  59,686
  61,393
  63,206
  65,129
  67,166
  69,321
  71,599
  74,006
  76,546
  79,225
  63,112
  66,089
  69,226
  72,529
  76,006
  79,665
  83,516
  87,566
  91,826
  96,306
  101,016
  105,967
  111,171
  116,641
  122,390
  128,430
  134,777
  141,445
  148,451
  155,810
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  59,686
  61,393
  63,206
  65,129
  67,166
  69,321
  71,599
  74,006
  76,546
  79,225
  63,112
  66,089
  69,226
  72,529
  76,006
  79,665
  83,516
  87,566
  91,826
  96,306
  101,016
  105,967
  111,171
  116,641
  122,390
  128,430
  134,777
  141,445
  148,451
  155,810
Operating income, $m
  44,023
  46,661
  49,463
  52,434
  55,581
  58,911
  62,431
  66,149
  70,074
  74,215
  97,518
  102,119
  106,965
  112,069
  117,441
  123,096
  129,045
  135,304
  141,886
  148,808
  156,085
  163,736
  171,778
  180,230
  189,112
  198,445
  208,252
  218,556
  229,380
  240,752
EBITDA, $m
  344,260
  358,685
  374,004
  390,251
  407,459
  425,666
  444,914
  465,244
  486,704
  509,342
  533,211
  558,366
  584,865
  612,770
  642,147
  673,064
  705,595
  739,815
  775,807
  813,654
  853,446
  895,278
  939,249
  985,462
  1,034,028
  1,085,061
  1,138,683
  1,195,021
  1,254,209
  1,316,388
Interest expense (income), $m
  9,508
  100,038
  95,103
  98,164
  101,414
  104,862
  108,513
  112,376
  116,460
  120,774
  125,327
  130,131
  135,196
  140,533
  146,156
  152,077
  158,310
  164,870
  171,773
  179,034
  186,671
  194,701
  203,145
  212,021
  221,351
  231,156
  241,461
  252,290
  263,668
  275,622
  288,181
Earnings before tax, $m
  -56,015
  -48,442
  -48,701
  -48,980
  -49,280
  -49,602
  -49,945
  -50,311
  -50,700
  -51,113
  -32,613
  -33,077
  -33,568
  -34,087
  -34,636
  -35,214
  -35,825
  -36,469
  -37,148
  -37,863
  -38,616
  -39,409
  -40,243
  -41,121
  -42,045
  -43,016
  -44,038
  -45,112
  -46,241
  -47,428
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -56,015
  -48,442
  -48,701
  -48,980
  -49,280
  -49,602
  -49,945
  -50,311
  -50,700
  -51,113
  -32,613
  -33,077
  -33,568
  -34,087
  -34,636
  -35,214
  -35,825
  -36,469
  -37,148
  -37,863
  -38,616
  -39,409
  -40,243
  -41,121
  -42,045
  -43,016
  -44,038
  -45,112
  -46,241
  -47,428

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,503,023
  1,566,000
  1,632,883
  1,703,814
  1,778,944
  1,858,437
  1,942,470
  2,031,232
  2,124,924
  2,223,761
  2,327,971
  2,437,795
  2,553,488
  2,675,321
  2,803,579
  2,938,562
  3,080,590
  3,229,996
  3,387,132
  3,552,371
  3,726,102
  3,908,738
  4,100,711
  4,302,475
  4,514,510
  4,737,319
  4,971,430
  5,217,400
  5,475,812
  5,747,282
Adjusted assets (=assets-cash), $m
  1,503,023
  1,566,000
  1,632,883
  1,703,814
  1,778,944
  1,858,437
  1,942,470
  2,031,232
  2,124,924
  2,223,761
  2,327,971
  2,437,795
  2,553,488
  2,675,321
  2,803,579
  2,938,562
  3,080,590
  3,229,996
  3,387,132
  3,552,371
  3,726,102
  3,908,738
  4,100,711
  4,302,475
  4,514,510
  4,737,319
  4,971,430
  5,217,400
  5,475,812
  5,747,282
Revenue / Adjusted assets
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
Average production assets, $m
  2,812,992
  2,930,856
  3,056,033
  3,188,784
  3,329,394
  3,478,170
  3,635,442
  3,801,565
  3,976,915
  4,161,894
  4,356,928
  4,562,469
  4,778,996
  5,007,013
  5,247,054
  5,499,684
  5,765,496
  6,045,118
  6,339,207
  6,648,461
  6,973,609
  7,315,422
  7,674,710
  8,052,323
  8,449,159
  8,866,158
  9,304,310
  9,764,656
  10,248,289
  10,756,359
Working capital, $m
  -2,314,672
  -2,411,657
  -2,514,658
  -2,623,893
  -2,739,594
  -2,862,014
  -2,991,426
  -3,128,120
  -3,272,407
  -3,424,617
  -3,585,101
  -3,754,231
  -3,932,400
  -4,120,023
  -4,317,542
  -4,525,418
  -4,744,142
  -4,974,229
  -5,216,221
  -5,470,690
  -5,738,239
  -6,019,500
  -6,315,140
  -6,625,859
  -6,952,395
  -7,295,523
  -7,656,057
  -8,034,853
  -8,432,811
  -8,850,877
Total debt, $m
  1,761,168
  1,817,847
  1,878,042
  1,941,880
  2,009,497
  2,081,041
  2,156,670
  2,236,556
  2,320,879
  2,409,832
  2,503,621
  2,602,462
  2,706,586
  2,816,236
  2,931,668
  3,053,153
  3,180,978
  3,315,443
  3,456,866
  3,605,581
  3,761,939
  3,926,311
  4,099,087
  4,280,675
  4,471,506
  4,672,034
  4,882,734
  5,104,107
  5,336,678
  5,581,001
Total liabilities, $m
  1,352,721
  1,409,400
  1,469,595
  1,533,433
  1,601,050
  1,672,594
  1,748,223
  1,828,109
  1,912,432
  2,001,385
  2,095,174
  2,194,015
  2,298,139
  2,407,789
  2,523,221
  2,644,706
  2,772,531
  2,906,996
  3,048,419
  3,197,134
  3,353,492
  3,517,864
  3,690,640
  3,872,228
  4,063,059
  4,263,587
  4,474,287
  4,695,660
  4,928,231
  5,172,554
Total equity, $m
  150,302
  156,600
  163,288
  170,381
  177,894
  185,844
  194,247
  203,123
  212,492
  222,376
  232,797
  243,779
  255,349
  267,532
  280,358
  293,856
  308,059
  323,000
  338,713
  355,237
  372,610
  390,874
  410,071
  430,248
  451,451
  473,732
  497,143
  521,740
  547,581
  574,728
Total liabilities and equity, $m
  1,503,023
  1,566,000
  1,632,883
  1,703,814
  1,778,944
  1,858,438
  1,942,470
  2,031,232
  2,124,924
  2,223,761
  2,327,971
  2,437,794
  2,553,488
  2,675,321
  2,803,579
  2,938,562
  3,080,590
  3,229,996
  3,387,132
  3,552,371
  3,726,102
  3,908,738
  4,100,711
  4,302,476
  4,514,510
  4,737,319
  4,971,430
  5,217,400
  5,475,812
  5,747,282
Debt-to-equity ratio
  11.720
  11.610
  11.500
  11.400
  11.300
  11.200
  11.100
  11.010
  10.920
  10.840
  10.750
  10.680
  10.600
  10.530
  10.460
  10.390
  10.330
  10.260
  10.210
  10.150
  10.100
  10.040
  10.000
  9.950
  9.900
  9.860
  9.820
  9.780
  9.750
  9.710
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -56,015
  -48,442
  -48,701
  -48,980
  -49,280
  -49,602
  -49,945
  -50,311
  -50,700
  -51,113
  -32,613
  -33,077
  -33,568
  -34,087
  -34,636
  -35,214
  -35,825
  -36,469
  -37,148
  -37,863
  -38,616
  -39,409
  -40,243
  -41,121
  -42,045
  -43,016
  -44,038
  -45,112
  -46,241
  -47,428
Depreciation, amort., depletion, $m
  300,237
  312,024
  324,542
  337,817
  351,878
  366,755
  382,483
  399,095
  416,630
  435,128
  435,693
  456,247
  477,900
  500,701
  524,705
  549,968
  576,550
  604,512
  633,921
  664,846
  697,361
  731,542
  767,471
  805,232
  844,916
  886,616
  930,431
  976,466
  1,024,829
  1,075,636
Funds from operations, $m
  244,223
  263,582
  275,841
  288,836
  302,597
  317,154
  332,538
  348,784
  365,930
  384,015
  403,080
  423,170
  444,332
  466,614
  490,070
  514,754
  540,724
  568,043
  596,773
  626,983
  658,745
  692,134
  727,228
  764,111
  802,871
  843,600
  886,393
  931,354
  978,588
  1,028,208
Change in working capital, $m
  -91,164
  -96,985
  -103,002
  -109,234
  -115,701
  -122,420
  -129,412
  -136,694
  -144,287
  -152,210
  -160,484
  -169,130
  -178,169
  -187,624
  -197,518
  -207,877
  -218,724
  -230,086
  -241,992
  -254,469
  -267,549
  -281,261
  -295,640
  -310,720
  -326,536
  -343,128
  -360,534
  -378,796
  -397,958
  -418,066
Cash from operations, $m
  335,387
  360,567
  378,842
  398,071
  418,298
  439,574
  461,949
  485,478
  510,217
  536,225
  563,564
  592,300
  622,500
  654,238
  687,588
  722,631
  759,448
  798,129
  838,765
  881,453
  926,294
  973,395
  1,022,868
  1,074,831
  1,129,407
  1,186,727
  1,246,927
  1,310,150
  1,376,546
  1,446,273
Maintenance CAPEX, $m
  -270,225
  -281,299
  -293,086
  -305,603
  -318,878
  -332,939
  -347,817
  -363,544
  -380,156
  -397,691
  -416,189
  -435,693
  -456,247
  -477,900
  -500,701
  -524,705
  -549,968
  -576,550
  -604,512
  -633,921
  -664,846
  -697,361
  -731,542
  -767,471
  -805,232
  -844,916
  -886,616
  -930,431
  -976,466
  -1,024,829
New CAPEX, $m
  -110,743
  -117,864
  -125,177
  -132,751
  -140,610
  -148,776
  -157,272
  -166,123
  -175,350
  -184,979
  -195,034
  -205,541
  -216,526
  -228,017
  -240,042
  -252,630
  -265,812
  -279,621
  -294,090
  -309,253
  -325,148
  -341,813
  -359,287
  -377,614
  -396,835
  -416,999
  -438,152
  -460,346
  -483,634
  -508,070
Cash from investing activities, $m
  -380,968
  -399,163
  -418,263
  -438,354
  -459,488
  -481,715
  -505,089
  -529,667
  -555,506
  -582,670
  -611,223
  -641,234
  -672,773
  -705,917
  -740,743
  -777,335
  -815,780
  -856,171
  -898,602
  -943,174
  -989,994
  -1,039,174
  -1,090,829
  -1,145,085
  -1,202,067
  -1,261,915
  -1,324,768
  -1,390,777
  -1,460,100
  -1,532,899
Free cash flow, $m
  -45,581
  -38,597
  -39,420
  -40,284
  -41,190
  -42,141
  -43,140
  -44,189
  -45,290
  -46,446
  -47,660
  -48,934
  -50,273
  -51,679
  -53,155
  -54,705
  -56,332
  -58,042
  -59,837
  -61,722
  -63,701
  -65,779
  -67,962
  -70,254
  -72,660
  -75,187
  -77,841
  -80,628
  -83,553
  -86,626
Issuance/(repayment) of debt, $m
  -91,380
  56,679
  60,195
  63,838
  67,617
  71,544
  75,630
  79,886
  84,323
  88,953
  93,789
  98,841
  104,124
  109,650
  115,432
  121,485
  127,825
  134,465
  141,423
  148,715
  156,358
  164,372
  172,775
  181,588
  190,832
  200,528
  210,700
  221,373
  232,571
  244,322
Issuance/(repurchase) of shares, $m
  206,436
  54,740
  55,389
  56,073
  56,793
  57,551
  58,348
  59,187
  60,069
  60,997
  43,034
  44,059
  45,137
  46,270
  47,461
  48,713
  50,028
  51,410
  52,861
  54,387
  55,989
  57,672
  59,440
  61,298
  63,248
  65,297
  67,449
  69,709
  72,083
  74,575
Cash from financing (excl. dividends), $m  
  115,056
  111,419
  115,584
  119,911
  124,410
  129,095
  133,978
  139,073
  144,392
  149,950
  136,823
  142,900
  149,261
  155,920
  162,893
  170,198
  177,853
  185,875
  194,284
  203,102
  212,347
  222,044
  232,215
  242,886
  254,080
  265,825
  278,149
  291,082
  304,654
  318,897
Total cash flow (excl. dividends), $m
  69,475
  72,822
  76,165
  79,627
  83,220
  86,953
  90,838
  94,884
  99,102
  103,504
  89,163
  93,966
  98,988
  104,241
  109,739
  115,494
  121,520
  127,833
  134,448
  141,380
  148,647
  156,265
  164,254
  172,632
  181,419
  190,637
  200,308
  210,454
  221,100
  232,272
Retained Cash Flow (-), $m
  -206,436
  -54,740
  -55,389
  -56,073
  -56,793
  -57,551
  -58,348
  -59,187
  -60,069
  -60,997
  -43,034
  -44,059
  -45,137
  -46,270
  -47,461
  -48,713
  -50,028
  -51,410
  -52,861
  -54,387
  -55,989
  -57,672
  -59,440
  -61,298
  -63,248
  -65,297
  -67,449
  -69,709
  -72,083
  -74,575
Prev. year cash balance distribution, $m
  119
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -136,842
  18,082
  20,775
  23,554
  26,427
  29,403
  32,490
  35,697
  39,033
  42,508
  46,129
  49,907
  53,851
  57,971
  62,277
  66,781
  71,492
  76,423
  81,586
  86,993
  92,658
  98,593
  104,813
  111,334
  118,171
  125,340
  132,859
  140,745
  149,018
  157,697
Discount rate, %
  15.50
  16.28
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.05
  25.25
  26.51
  27.84
  29.23
  30.69
  32.22
  33.83
  35.53
  37.30
  39.17
  41.13
  43.18
  45.34
  47.61
  49.99
  52.49
  55.11
  57.87
  60.76
  63.80
PV of cash for distribution, $m
  -118,478
  13,374
  12,942
  12,172
  11,149
  9,955
  8,670
  7,365
  6,102
  4,928
  3,877
  2,969
  2,212
  1,600
  1,124
  765
  504
  321
  198
  117
  67
  37
  19
  10
  5
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  36.7
  27.1
  20.2
  15.1
  11.4
  8.7
  6.7
  5.1
  4.0
  3.3
  2.8
  2.4
  2.0
  1.7
  1.5
  1.2
  1.1
  0.9
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4
  0.3
  0.3
  0.3
  0.2
  0.2

JPMorgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services. It operates in four segments, as well as a Corporate segment. Its segments are Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset Management. The Consumer & Community Banking segment offers services to consumers and businesses through bank branches, automatic teller machines (ATMs), online, mobile and telephone banking. The Corporate & Investment Bank segment, comprising Banking and Markets & Investor Services, offers investment banking, market-making, prime brokerage, and treasury and securities products and services to corporations, investors, financial institutions, and government and municipal entities. The Commercial Banking segment provides financial solutions, including lending, treasury services, investment banking and asset management. The Asset Management segment comprises investment and wealth management.

FINANCIAL RATIOS  of  JPMorgan Chase (JPM)

Valuation Ratios
P/E Ratio 16.5
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 20.2
Price to Free Cash Flow 20.2
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 194.9%
Total Debt to Equity 194.9%
Interest Coverage 5
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 1.2%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 9.9%
Return On Equity - 3 Yr. Avg. 10%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 28.4%
Eff/ Tax Rate - 3 Yr. Avg. 26%
Payout Ratio 34.3%

JPM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JPM stock intrinsic value calculation we used $99624 million for the last fiscal year's total revenue generated by JPMorgan Chase. The default revenue input number comes from 2017 income statement of JPMorgan Chase. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JPM stock valuation model: a) initial revenue growth rate of 4.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.5%, whose default value for JPM is calculated based on our internal credit rating of JPMorgan Chase, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of JPMorgan Chase.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JPM stock the variable cost ratio is equal to 58.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for JPM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for JPMorgan Chase.

Corporate tax rate of 27% is the nominal tax rate for JPMorgan Chase. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JPM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JPM are equal to 2712.4%.

Life of production assets of 10 years is the average useful life of capital assets used in JPMorgan Chase operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JPM is equal to -2231.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for JPMorgan Chase - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 3552 million for JPMorgan Chase is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of JPMorgan Chase at the current share price and the inputted number of shares is $407.7 billion.

RELATED COMPANIES Price Int.Val. Rating
KEY KeyCorp 21.59 24.31  buy
NTRS Northern Trust 107.70 20.86  str.sell
FITB Fifth Third Ba 29.69 9.65  str.sell

COMPANY NEWS

▶ Trump asks SEC to consider ending required quarterly reports   [Aug-17-18 04:20PM  Associated Press]
▶ Quarter - Q1, Q2, Q3, Q4   [08:46AM  Investopedia]
▶ United Airlines loyalty program gets thumbs-up from millennials   [Aug-16-18 12:33PM  American City Business Journals]
▶ JPMorgan Chase vet joins F.N.B.   [09:56AM  American City Business Journals]
▶ Dollar Falls as Turkish Lira Recovers   [03:27AM  Investing.com]
▶ JPMorgan Chase Announces 2019 Investor Day   [04:16PM  Business Wire]
▶ Developer of tallest tower in Edgewater nabs $138M construction loan   [11:55AM  American City Business Journals]
▶ United taps Tracee Ellis Ross to promote Explorer card   [09:05AM  American City Business Journals]
▶ [$$] Analysts react as lira resumes fall   [08:08AM  Financial Times]
▶ Why JPMorgan Chase Stock Jumped 10% in July   [Aug-10-18 05:29PM  Motley Fool]
▶ United Airlines taps Tracee Ellis Ross to hawk Explorer credit card   [03:58PM  American City Business Journals]
▶ [$$] Turkey delivers August crisis for markets   [02:09AM  Financial Times]
▶ [$$] JPMorgans ETF Business Is Finally Catching Up to Goldman   [Aug-09-18 07:45PM  The Wall Street Journal]
▶ JPMorgan ETFs Turn a Corner   [01:15PM  Barrons.com]
▶ Disney Stock Faces Tough but Beatable Test for Q3   [Aug-07-18 11:05AM  InvestorPlace]
▶ 3 Top Bank Stocks to Buy Right Now   [Aug-04-18 07:15AM  Motley Fool]
▶ The 5 Safest Growth Stocks to Buy for Income   [Aug-03-18 10:23AM  InvestorPlace]
▶ [$$] Italian PM seeks to calm jitters on budget   [05:53AM  Financial Times]
▶ What JPMorgan's Dimon had to say to Portland employees during a West Coast swing   [Aug-02-18 07:02PM  American City Business Journals]
▶ Chase rolls out cardless ATMs   [05:05PM  Yahoo Finance Video]
▶ Business Highlights   [05:54PM  Associated Press]
▶ J.P. Morgan beefing up real estate advisory services   [12:45PM  American City Business Journals]
▶ Wall St. Whale Makes ETF Splash   [Jul-31-18 06:00PM  ETF.com]
▶ Bulls bank on JPMorgan   [01:33PM  CNBC Videos]
▶ Loan market shrugs off prison financing protests   [Jul-27-18 01:46PM  Reuters]
▶ Chase Pay and Samsung Pay Join Forces   [11:45AM  Business Wire]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.