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With EPS Growth And More, JPMorgan Chase (NYSE:JPM) Makes An Interesting Case

·4 min read

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.

View our latest analysis for JPMorgan Chase

How Quickly Is JPMorgan Chase Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Over the last three years, JPMorgan Chase has grown EPS by 14% per year. That growth rate is fairly good, assuming the company can keep it up. It's also worth noting that the EPS growth has been assisted by share buybacks, indicating the company is in a position to return capital to shareholders.

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. It's noted that JPMorgan Chase's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note JPMorgan Chase achieved similar EBIT margins to last year, revenue grew by a solid 4.1% to US$124b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
earnings-and-revenue-history

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of JPMorgan Chase's forecast profits?

Are JPMorgan Chase Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

With strong conviction, JPMorgan Chase insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the US$100k that Independent Director Mellody Hobson spent buying shares (at an average price of about US$150). Strong buying like that could be a sign of opportunity.

The good news, alongside the insider buying, for JPMorgan Chase bulls is that insiders (collectively) have a meaningful investment in the stock. Notably, they have an enviable stake in the company, worth US$2.7b. We note that this amounts to 0.8% of the company, which may be small owing to the sheer size of JPMorgan Chase but it's still worth mentioning. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Should You Add JPMorgan Chase To Your Watchlist?

As previously touched on, JPMorgan Chase is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with JPMorgan Chase , and understanding it should be part of your investment process.

The good news is that JPMorgan Chase is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.