“I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” said billionaire JPMorgan Chase CEO Jamie Dimon during the bank’s annual meeting in May of 2024. “Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren’t going to do it.”
At the time, JPMorgan’s shares traded at 2.4 times their tangible book value, a measure of a bank’s market price compared to its tangible net worth. That figure strips out goodwill and other intangibles and focuses on assets that can be measured, such as loans and deposits. The ratio is a simple way to judge the premium investors are paying for what the bank actually owns.
Today that multiple is above three times, a level JPMorgan hasn’t reached since 2002. And yet, the bank’s stock is up 28% this year, roughly twice the S&P 500’s gain. It’s rising alongside almost everything else. The S&P 500 itself is at record highs. Gold has crossed $4,000 for the first time. Bitcoin just notched a new record this week of $126,296. Many investors now talk about an “everything bubble,” where every major asset seems priced for perfection. It’s worth asking if the nation’s largest bank, with $4.6 trillion in assets, is part of it too.
But some analysts say JPMorgan’s valuation has more to do with strength than speculation.
One of them is Christopher McGratty, head of U.S. bank research at Keefe, Bruyette & Woods, who says the premium is earned. “It’s expensive,” says McGratty, “but you get what you pay for.” The average regional bank in KBW’s index trades around 1.7 times tangible book. Even JPMorgan’s biggest peers—Bank of America at 1.8, Wells Fargo at 1.9, and Citigroup at 1.0—trail far behind. The reason, McGratty says, is quality. JPMorgan delivers higher and steadier returns than anyone else, with a 17 percent return on common equity, five points above the next-best large commercial bank. “They’re running five-minute miles while everyone else runs eight,” he says.
A big part of that edge comes from technology, according to McGratty.
JPMorgan plans to spend about $18 billion this year on tech, more than many regional banks spend on all their expenses combined. Roughly $10 billion keeps systems running. The other $8 billion goes toward new products, platforms, and modern infrastructure. “They’re trying to create a wedge to peers that they can outrun for generations,” says McGratty. It’s an effort to become more efficient and durable, with artificial intelligence and cloud computing now core to the business. KBW rates the stock “outperform,” calling it the closest thing the banking sector has to a growth company.
Quality, for now, has a price. JPMorgan’s tangible book multiple is the highest among the 12 commercial banks in the S&P 500. However, its 17 percent return on common equity is also the best. And with the stock up 28 percent this year—seven points ahead of runner-up Citizens Financial—investors seem happy to pay up.
Still, it takes conviction to buy a stock the CEO once called rich at a lower valuation than it presently trades at. Fourteen percent of analysts tracked by FactSet now rate JPMorgan a sell, the highest level in at least five years. Yet the bank isn’t acting cautious. In January, it increased share buybacks, just seven months after Dimon said it wouldn’t.
JPMorgan didn’t respond to a request for comment.
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