JPMORGAN CHASE & CO (JPM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $357.64, JPMORGAN CHASE & CO (JPM) is priced for 18.7% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-08-11.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/JPM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 9.5% cost of equity; ROE searched up to the 16.3% ROE ceiling.

How unusual the bet is: elevated

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=4)

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Three funded financial businesses sit under one balance sheet: the Commercial & Investment Bank (44% of revenue, "ranked #1 for Global Investment Banking fees, according to Dealogic" in FY2025) and Consumer & Community Banking (43%) are nearly equal in scale, while Asset & Wealth Management oversees "client assets of $7.1 trillion" at 13%.

• The price requires the bank to sustain roughly 16% return on equity for about 24 years; that level runs well above JPMorgan's own long-run average, and only about half of companies earning comparable returns have maintained them for even a decade.

• Management raised full-year net interest income guidance to approximately $105.5 billion after Q2 2026, up from $103 billion three months prior; the next quarterly report will test whether credit costs stay contained as the consumer card book scales with the Apple Card acquisition.

Bull Case

The most obvious objection to JPMorgan at this price is simple: no bank should trade at more than 3x tangible book. Banks are supposed to be cheap, and every standard method for valuing bank equity lands below the current share price. The question is whether the objection applies to this particular institution.

Consider what the franchise actually earns. The FY2025 10-K reports "Investment Banking revenue was $10.2 billion, up 6%" with "Investment Banking fees were up 7%, driven by higher fees across products", and the firm ranked first globally for investment banking fees that year. Q2 2026 extended the streak: equity markets revenue reached $6.0 billion (up 86% year over year), lifting total markets revenue to $12.1 billion for the quarter. The firm reported net income of $21.2 billion for the quarter, its highest on record.

A bank's premium to tangible book is justified when its return on equity exceeds its cost of equity by a persistent margin. JPMorgan earns about 16.2% on equity on a trailing basis. At the Q2 2026 print, return on tangible common equity reached 23% excluding one-time items (29% including a Visa stake gain). The premium to tangible book reflects the spread between what this bank earns and what a generic bank would be worth at book.

The consumer franchise provides structural funding advantages. Consumer & Community Banking generates 43% of revenue, and the firm is adding scale: the 10-K disclosed that "Chase will become the new issuer of Apple Card" after "The Firm entered into a forward purchase commitment on December 30, 2025 to acquire the Apple credit card portfolio". That deal absorbs a consumer lending book with built-in distribution into an already dominant retail platform. Asset & Wealth Management manages "client assets of $7.1 trillion", a fee business that scales with market valuations without consuming regulatory capital.

Capital return compounds the equity claim. About 86% of earnings flow back through dividends and buybacks, and the share count has shrunk at roughly 2.3% annually over four years. Each retired share concentrates a growing earnings stream among fewer holders. At $20.89 in trailing EPS, the per-share economics improve with every buyback cycle.

Management raised full-year NII guidance to approximately $105.5 billion after Q2 2026, up from $103 billion three months prior, a pattern consistent with the guidance record since 2007: three raises against one cut.

Bear Case

JPMorgan now trades at the top of the large-bank peer group by price-to-tangible-book. That position rests on one assumption: that the return-on-equity cycle which governs every other large bank does not apply here.

Every standard method for valuing bank equity lands below today's price. The book-value-and-profitability methods land between roughly a fifth and more than half below the current price, depending on how many years of excess returns they credit. The earnings-capitalization approach, which divides trailing EPS of $20.89 by the cost of equity, lands about 59% below. Even the most favorable model (a two-stage approach crediting five years of above-cost returns before fading) still falls short by roughly a sixth. No standard framework defends the price from trailing financials alone. The gap is the market's bet on duration: that the current return on equity of about 16.2% holds longer than any model can reproduce from historical evidence.

To sustain today's multiple, JPMorgan needs to keep earning its current return on equity (about 16.2%) for roughly 24 years. The bank's own long-run return sits well below that level. Among comparable firms, only about half that earned returns this high sustained them for even a decade. If the return on equity mean-reverts toward JPMorgan's long-run average, the price-to-book it supports compresses proportionally.

Credit costs are cooperating today, but the FY2025 10-K disclosed a "net addition to the allowance for credit losses of $3.3 billion which was driven by $2.2 billion related to the Apple Card transaction, loan growth in Card Services and the impact of changes in the Firm's weighted-average macroeconomic outlook". The Apple Card portfolio introduces a consumer lending book with higher charge-off characteristics than JPMorgan's legacy base. Card net charge-off rates are running near 3.4%. An unemployment-driven credit cycle would hit this book harder than the legacy mortgage and auto portfolios.

The Commercial & Investment Bank's 44% revenue share carries cyclical exposure. FY2025 "Debt underwriting fees were $4.5 billion, up 9%, predominantly driven by non-investment grade loans and investment grade bonds" per the 10-K. Q2 2026 saw equity trading revenue surge 86%. Markets revenue at this level is a peak-cycle print, not a sustainable baseline. The FY2025 10-K also disclosed that "Noninterest expense was $40.3 billion, up 6%", a cost trajectory that compresses returns if revenue normalizes while expenses stay elevated.

Regulatory risk remains structural. The proposed Basel III endgame rules would require JPMorgan to hold roughly $20 billion in additional capital, directly enlarging the denominator in the return-on-equity calculation. The CET1 ratio stood at 14.1% at Q2 2026. Additional capital requirements would compress the spread between ROE and cost of equity that justifies the entire premium.

Valuation

A bank earning 16.2% on its equity and priced at about 3.1x tangible book is making a specific bet about duration. At $359.19, the price requires that return on equity to persist for roughly 24 years before normalizing (equivalent to about 19.7% in perpetuity). Against the bank's own history, the current return runs well above average. Against the peer group, the price-to-book sits at the very top. Among all firms earning comparable returns, only about half have sustained them for even a decade. The implied assumption reads as demanding.

JPMorgan's trailing financials cannot reproduce the current price through any standard bank-equity lens. The asset-value methods, which combine book value of $133.83 per share with the profitability earned on that book, sit about 43% below the current price at the family center. The earnings-yield method, capitalizing trailing EPS of $20.89 at the required return, lands about 59% below. The bank-specific model takes tangible book value of $114.45 per share and justifies a tangible-book multiple from the spread between return on equity and cost of equity, adjusted for sustainable growth and credit quality; that model reaches roughly four-fifths of the current price. The most favorable approach, a two-stage model crediting five years of excess returns before convergence, reaches roughly five-sixths. The gap between every method and the price is the market pricing persistence.

Three businesses generate that return, though their individual equity claims are not separately disclosed. The FY2025 10-K reports that the Commercial & Investment Bank produced $78.5 billion in revenue (44% of the total), with "Investment Banking revenue was $10.2 billion, up 6%" and the firm "ranked #1 for Global Investment Banking fees, according to Dealogic". Consumer & Community Banking contributed $76.0 billion (43%). Asset & Wealth Management, overseeing "client assets of $7.1 trillion", contributed $24.1 billion (13%). Because JPMorgan is a funded financial institution, each unit is valued on its own common equity; standalone book equity and unit-level capital adequacy are not disclosed, so no per-unit value is stated.

JPMorgan returns about 86% of trailing earnings through dividends and buybacks. The share count has declined at roughly 2.3% annually over four years. CET1 stood at 14.1% at Q2 2026, providing buffer above regulatory minimums. Bank of America's FY2025 10-K reported "Net income was $30.5 billion, or $3.81 per diluted share, in 2025"; JPMorgan's trailing net income of $58.9 billion roughly doubles that, and the premium to book partly reflects that scale advantage.

Catalysts

Q2 2026 set a high bar for the quarters ahead. Net income reached $21.2 billion (up 41%) with return on tangible common equity of 29%, though a $4.6 billion gain on JPMorgan's Visa stake accounted for part of the upside; excluding that, ROTCE was 23%. Management raised full-year net interest income guidance to approximately $105.5 billion, up from $103 billion three months prior. The raise reflects confidence in the deposit franchise, but the guidance assumes two Fed rate cuts ending near a 3.25% upper bound on the fed funds rate.

Credit quality is the near-term variable. Provision for credit losses fell 24% in Q2 to $2.5 billion, and card net charge-off rates are running near 3.4%. The Apple Card portfolio, acquired in early 2026, is still being integrated; the FY2025 10-K disclosed a "net addition to the allowance for credit losses of $3.3 billion which was driven by $2.2 billion related to the Apple Card transaction". The Q3 earnings print will reveal whether the card book performs within the reserves already built.

Regulatory capital remains in focus. The proposed Basel III endgame revisions would require JPMorgan to hold an estimated $20 billion in additional capital. Resolution is expected in the coming quarters, and the outcome directly affects payout capacity and return on equity. The analyst consensus carries a moderate buy rating with an average price target near $374 from 24 analysts.

Peer Cohorts (Per Segment, With Filing Citations)

Consumer & Community Banking (reported)

• WFC (WELLS FARGO & COMPANY/MN)
• FY2025 10-K: …specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which allows management to assess performance consistently across the operating segments. Consumer…
• FY2025 10-K: …reflecting lower net charge-offs, partially offset by a higher change in allowance for auto loans driven by higher loan balances. Noninterest expense increased driven by: • higher advertising expense; • higher branch personnel expense; and • the impact of the transfer of certain business customers from the Commercial…
• BAC (BANK OF AMERICA CORP /DE/)
• FY2025 10-K: …additional information about our segments' operational performance, client trends and business growth. These KPIs may not be defined or calculated in the same way as similar KPIs used by other companies. Bank of America 36 Consumer Banking (Dollars in millions) 2025 2024 % Change Net interest income $ 35,309 $ 33,078…
• FY2025 10-K: …well as other client-managed businesses. Our customers and clients have access to a coast-to-coast network, including financial centers in 38 states and the District of Columbia. As of December 31, 2025, our network includes approximately 3,600 financial centers, approximately 15,000 ATMs, nationwide call centers and…
• C (Citigroup Inc)
• FY2025 10-K: …origination costs, that are deferred and recognized as Interest income over the lives of the related loans. (4) Excludes $17 million of unallocated portfolio-layer cumulative basis adjustments at December 31, 2025. (5) Based on contractual terms. Repricing characteristics may effectively be modified from time to time…
• FY2025 10-K: …30, 2025, June 30, 2025, March 31, 2025 and December 31, 2024, respectively. (4) See Note 15 for details on loan-to-value ratios for the mortgage portfolios and FICO scores for the U.S. portfolio. (5) Effective January 1, 2025, USPB changed its reporting for certain installment lending products that were transferred…
• USB (US BANCORP \DE\)
• FY2025 10-K: …on secured loans. These and other risk characteristics are reflected in forecasts of losses which are the primary factors in determining the allowance for credit losses for the consumer lending segment. The Company further disaggregates its loan portfolio segments into various classes based on their underlying risk…
• FY2025 10-K: …lease financing, agricultural credit, warehouse mortgage lending, small business lending, commercial real estate lending, health care lending and correspondent banking financing. The Company also offers an array of consumer lending products, including residential mortgages, credit card loans, auto loans, retail…
• PNC (PNC FINANCIAL SERVICES GROUP, INC.)
• FY2025 10-K: …account data and statement information, card activation, card renewals, and card suspension and blockage. Interchange fees are earned when cardholders make purchases and are presented in Table 120 net of credit card reward costs, which are earned by customers when they make purchases. The PNC Financial Services…
• FY2025 10-K: …22 Segment Reporting for additional information on our business segments, including a description of each business. The PNC Financial Services Group, Inc. - 2025 Form 10-K 43 Retail Banking Retail Banking's core strategy is to build lifelong, primary relationships by creating a sense of financial well-being and ease…
• TFC (TRUIST FINANCIAL CORP)
• FY2025 10-K: 1-01 2025-12-31 0000092230 us-gaap:ConsumerPortfolioSegmentMember us-gaap:AutomobileLoanMember tfc:OtherLoanModificationsMember 2025-01-01 2025-12-31 0000092230 us-gaap:ConsumerPortfolioSegmentMember tfc:OtherConsumerLendingMember tfc:RenewalsMember 2025-01-01 2025-12-31 0000092230…
• FY2025 10-K: …2023-01-01 2023-12-31 0000092230 us-gaap:ConsumerPortfolioSegmentMember tfc:HomeEquityLendingMember tfc:RenewalsMember 2023-01-01 2023-12-31 0000092230 us-gaap:ConsumerPortfolioSegmentMember tfc:HomeEquityLendingMember us-gaap:ExtendedMaturityMember 2023-01-01 2023-12-31 0000092230…
• COF (CAPITAL ONE FINANCIAL CORP)
• FY2025 10-K: ATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2023 Credit Card Consumer Banking Commercial Banking (Dollars in millions) Domestic Card Personal Loans International Card Businesses Total Credit Card Auto Retail Banking Total Consumer Banking Commercial and Multifamily Real Estate Commercial…
• FY2025 10-K: …such as certain restructuring charges, integration expenses and certain liabilities incurred by Discover ahead of the Transaction. • Credit Card: Consists of our domestic consumer card lending, personal loans, domestic small business card lending and international card businesses in the U.K. and Canada. • Consumer…

Commercial & Investment Bank (reported)

• GS (The Goldman Sachs Group, Inc.)
• FY2025 10-K: …income attributed to transaction banking deposits. Other also includes investing activities related to our Global Banking & Markets activities. The table below presents our Global Banking & Markets assets. As of December $ in millions 2025 2024 Cash and cash equivalents $ 131,809 $ 143,041 Collateralized agreements…
• FY2025 10-K: …activities. These investments include public and private equity securities, debt securities and loans, related to corporate, real estate and infrastructure assets. We also make investments through CIEs, substantially all of which are engaged in real estate investment activities. The table below presents our Asset &…
• MS (MORGAN STANLEY)
• FY2025 10-K: …operating segments being treated as transactions with external parties for purposes of segment disclosures, the Firm includes an Intersegment Eliminations category to reconcile the business segment results to the consolidated results. The Firm's CODM is its Chief Executive Officer, who evaluates segment performance…
• FY2025 10-K: …secured by underlying real estate and are typically in term loan form. In addition, as part of certain of its trading and securitization activities, Institutional Securities may also hold residential real estate loans. Securities-based lending and Other includes financing extended to sales and trading customers and…
• C (Citigroup Inc)
• FY2025 10-K: …restructurings and corporate defense activities. • Corporate Lending consists of corporate and commercial banking, serving as the conduit for Citi's product suite to clients. In addition to earning net interest spread revenue on its Corporate Lending activities, Banking primarily generates investment banking fees,…
• FY2025 10-K: Executive Officer. Collateral dependent: A loan is considered collateral dependent when repayment of the loan is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty, including when foreclosure is deemed probable based on borrower…
• BAC (BANK OF AMERICA CORP /DE/)
• FY2025 10-K: …additional information about our segments' operational performance, client trends and business growth. These KPIs may not be defined or calculated in the same way as similar KPIs used by other companies. Bank of America 36 Consumer Banking (Dollars in millions) 2025 2024 % Change Net interest income $ 35,309 $ 33,078…
• FY2025 10-K: …. (Dollars in millions) 2025 2024 2023 Net interest income Interest income Loans and leases $ 63,080 $ 61,993 $ 57,124 Debt securities 27,393 26,007 20,226 Federal funds sold and securities borrowed or purchased under agreements to resell 15,433 19,911 18,679 Trading account assets 12,239 10,376 8,773 Other interest…
• JEF (Jefferies Financial Group Inc.)
• FY2025 10-K: …of the financial assets. Broker Receivables . Our receivables from brokers, dealers, and clearing organizations include deposits of cash with exchange clearing organizations to meet margin requirements, amounts due from clearing organizations for daily variation settlements, securities failed-to-deliver or receive…
• FY2025 10-K: …the performance obligation is completed. • Internet Connection and Broadband Revenues. Revenues associated with internet connection and mobile voice services provided to customers are recognized based on the volume of service provided as of a given date and the related service charge. Revenues from the activation of…
• EVR (EVERCORE INC.)
• FY2025 10-K: …interest expense. Investment Banking & Equities. Our Investment Banking & Equities segment earns fees from its clients for providing advice on mergers, acquisitions, divestitures, capital raising, leveraged buyouts, liability management and restructurings, private funds advisory and private capital markets services,…
• FY2025 10-K: …Interest and Investments, on the Consolidated Statements of Operations. EGL also invests in fixed income portfolios consisting of U.S. Treasury securities, which are carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Consolidated Statements of…

Asset & Wealth Management (reported)

• BLK (BlackRock, Inc.)
• FY2025 10-K: …AUM decreased $166 billion due to the impact of foreign exchange movements, primarily due to the strengthening of the US dollar, largely against the euro, the Japanese yen, the Canadian dollar and the British pound. Discussion of Financial Results Introduction The Company derives a substantial portion of its revenue…
• FY2025 10-K: …102% to 112% of the value of the loaned securities. Generally, the revenue earned is shared between the Company and the funds or accounts managed by the Company from which the securities are borrowed. Investment advisory agreements for certain separate accounts and investment funds provide for performance fees based…
• TROW (PRICE T ROWE GROUP INC)
• FY2025 10-K: …management impact our revenues and results of operations. At December 31, 2025, we had $1,775.6 billion in assets under management, an increase of $169.0 billion from the end of 2024. This increase in assets under management was driven by market appreciation, net of distributions not reinvested, of $216.7 billion,…
• FY2025 10-K: …U.S. / Global / International: Target Date, Custom Target Date Target Allocation Global Allocation Global Income Managed Volatility Custom Solutions Real Assets Retirement Income Alternatives U.S. / Global / International: Private Credit Leveraged Loans Mezzanine Real Assets / CRE Structured Products Stressed /…
• BEN (FRANKLIN RESOURCES, INC.)
• FY2025 10-K: …compared to the Euro. Long-term inflows increased 8% to $343.9 billion, as compared to the prior year, driven by higher inflows across equity, fixed income, and alternative strategies, particularly in open-end funds, retail separately managed accounts, private funds, and sub-advised mutual funds. This growth was…
• FY2025 10-K: …the Company. We have one operating segment, investment management and related services. We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Apera ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ®…
• IVZ (Invesco Ltd.)
• FY2025 10-K: …to external parties who perform functions on behalf of, and distribute, the company's managed funds. The Net revenue presentation assists in identifying the revenue contribution generated by the company, removing distortions caused by the differing distribution channel fees and allowing for a fair comparison with…
• FY2025 10-K: …commercial loans, income based products inclusive of private strategies, and seed capital in fixed income funds, the valuation of which could vary with changes in interest and default rates as well as credit quality deterioration. Declines in the values of AUM could lead to reduced revenues and net income as…
• AMP (AMERIPRISE FINANCIAL INC)
• FY2025 10-K: …advisement flows are estimated flows based on the period-to-period change in assets less calculated performance based on strategy returns on a one-quarter lag. (6) Legacy insurance partners assets and net flows are included in the rollforwards above. Total segment AUM increased $33.2 billion, or 5%, during 2025…
• FY2025 10-K: …we provide investment management, advice and products to retail, high net worth and institutional clients on a global scale. Revenues in the Asset Management segment are primarily earned based on managed asset balances, which are impacted by market movements, net asset flows, asset allocation and product mix. We may…
• NTRS (NORTHERN TRUST CORP)
• FY2025 10-K: …subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region. At December 31, 2025, total Asset Servicing assets under custody/administration (AUC/A), assets under custody, and assets under management (AUM) were $17.4 trillion, $13.6 trillion, and $1.3…
• FY2025 10-K: …by investment firms as collateral for securities borrowed from custody clients are managed by Northern Trust and are included in assets under custody and assets under management Wealth Management Wealth Management fee income is calculated primarily based on market values of client AUC/A and AUM and is impacted by…
• STT (STATE STREET CORPORATION)
• FY2025 10-K: …we provide administrative services for clients. To the extent that we provide more than one AUC/A service (including back and middle office services) for a client's assets, the value of the asset is only counted once in the total amount of AUC/A. Assets under management: The total market value of client assets for…
• FY2025 10-K: …on an indicative sample of revenue, we estimate that approximately 65%, on average, of our servicing fee revenues have been variable due to changes in asset valuations including changes in daily average valuations of AUC/A; another approximately 20%, on average, of our servicing fees are impacted by the volume of…

Article Insight (Recent News Sentiment)

Sentiment score: 65.00 (MEDIUM confidence) FUD/Hype: HYPE_DETECTED (The Insider Monkey article concludes with a plug for an unrelated "cheapest AI stock" with 10,000% upside, suggesting a redirection of capital rather than genuine conviction in JPM.) Claim alignment: ALIGNED

These articles reinforce the existing bull case, primarily through confirmation of ongoing capital allocation and franchise strength.

Insider Monkey

• Scope: Details JPMorgan’s European expansion and recent financing mandates.
• Data: $27.63 billion spent on share buybacks in the last twelve months.
• Verdict: Validates the capital return program detailed in the analysis.

24/7 Wall St.

• Scope: Reports on Truist’s price target increase following Q1 2026 earnings.
• Data: Truist raised the price target to $332, citing revenue growth and risk management.
• Verdict: Aligns with the assessment of JPMorgan’s franchise strength and earnings power.

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.