Many investors, especially inexperienced investors, tend to buy stocks of companies that have a good story, even if they are loss-making. Sometimes, these stories cloud investors’ minds and they invest on emotion instead of the company’s superior fundamental value. Loss-making companies can act like a sponge to absorb capital, so investors need to be careful not to waste good money.
So if this high-risk, high-reward mentality doesn’t suit you, you might be interested in a profitable, growing company like JPMorgan Chase (NYSE:JPM). Even though the company is fairly valued by the market, investors would likely agree that JPMorgan Chase will continue to generate profits and provide a means to add long-term value to shareholders.
Check out our latest analysis for JPMorgan Chase
How Fast is JPMorgan Chase Growing?
If a company can keep growing earnings per share (EPS) long enough, the share price should eventually follow, which is why EPS growth is an attractive feature of any company. Over the past three years, JPMorgan Chase has grown its EPS at 6.9% per year. While that kind of growth rate isn’t spectacular, it does show that the business is growing.
One way to double-check a company’s growth is to look at the changes in its revenue and earnings before interest and tax (EBIT) margins. Our analysis highlights that JPMorgan Chase’s operating revenues don’t account for all of its revenue over the past 12 months, so our margin analysis may not accurately reflect the underlying business. While JPMorgan Chase’s EBIT margins have remained largely unchanged over the past year, the company should be happy to report that revenue grew 19% to $161 billion in the period, which is progress.
The chart below shows how the company’s earnings and revenue have trended over time: Click on the chart to see the actual numbers.
Earnings and Revenue History
Nobody looks in the rear-view mirror while driving, so you might find this free report showing analyst forecasts for JPMorgan Chase’s future profits more interesting.
Are JPMorgan Chase insiders aligned with all shareholders?
JPMorgan Chase has a market capitalization of $598 billion, so it’s unlikely that insiders own a significant amount of shares. However, the fact that they are investors in the company is reassuring. In fact, they have a significant amount of their assets invested in the company, currently worth $2.2 billion. This represents 0.4% of the company, which may be small given the size of JPMorgan Chase, but it’s still worth mentioning. It signals to shareholders that there is some alignment between management and shareholders.
The story continues
Is JPMorgan Chase Worth Watching?
One key encouraging feature of JPMorgan Chase is that it is growing earnings. Adding fuel to the fire is the significant insider ownership in the company. This combination is definitely popular with investors, so consider putting the company on your watchlist. Don’t forget that risks may still be out there. For example, we’ve identified 2 warning signs for JPMorgan Chase (1 which doesn’t sit too well with us) that you should be aware of.
While picking stocks with neither earnings growth nor insider buying can pay off, for investors who care about these key metrics, below is a curated list of US companies with promising growth potential and insider confidence.
Please note that the insider transactions discussed in this article are reportable transactions in the relevant jurisdictions.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
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