JPM

We rate JPMORGAN CHASE & CO (JPM) as a Reduce with a composite score of 45.4/100 at a current price of $297.70. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (59th percentile) and momentum (52th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (29th percentile) and value (39th percentile) tempers our overall conviction. We assign a No Moat rating (30/100), High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

JPMORGAN CHASE & CO holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.4/100 places it at rank #2736 in our full 7,333-stock universe. As a mega-cap company with a $863.2B market capitalization, JPMORGAN CHASE & CO benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

Revenue contraction of -8% combined with momentum at the 52th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 52% (-24.9pp vs sector) narrow to operating margins of 48% (+31.4pp vs sector) and net margins of 31.7%, yielding a gross-to-net conversion rate of 61%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $297.70, JPMORGAN CHASE & CO is trading at a premium to fundamental value. Our value factor score of 39/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 14.7x (a 23% premium to the sector median of 11.9x), EV/EBITDA of 16.2x (at a premium), P/B of 2.3x, P/S of 4.7x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to JPMORGAN CHASE & CO. Key risk factors include significant leverage (138% debt-to-equity), weak quality scores (29th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (138% debt-to-equity); weak quality scores (29th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 59th percentile and quality factor at the 29th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 52% provide a buffer against cost pressures; large-cap scale ($863.2B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate JPMORGAN CHASE & CO's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 15.8%, and the balance sheet is managed within acceptable parameters (D/E: 138%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; JPMORGAN CHASE & CO falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.69% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, JPMORGAN CHASE & CO receives a Reduce rating with a composite score of 45.4/100 (rank #2736 of 7,333). Our quantitative framework assigns a No Moat (30/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 44/100.

Our analysis does not support a constructive view on JPMORGAN CHASE & CO at this time. The combination of limited competitive advantages, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.