If you want to research JPMorgan Chase stock, start with the business model. Understand how the bank makes money across its four major segments, then move to financial health indicators like capital ratios and loan quality. From there, evaluate valuation relative to peers, assess JPM's competitive position in banking, and map out the risks. That sequence gives you a structured JPM due diligence process that covers what actually matters.
Key takeaways
- JPMorgan Chase operates four distinct business segments, and each one carries different risk and growth profiles you need to evaluate separately.
- Bank stocks require specific financial metrics that don't apply to other sectors, including net interest margin, CET1 ratio, and provision for credit losses.
- Valuation for banks centers on price-to-book and price-to-tangible-book ratios rather than standard P/E comparisons.
- Interest rate sensitivity, credit risk, and regulatory capital requirements are the three risk categories that drive most of JPM's stock movement.
- A complete JPMorgan Chase research guide should take you from business model comprehension to an informed opinion in about five steps.
How to research JPMorgan Chase stock: start with the business model
Before you open a single financial statement, you need to understand what JPMorgan Chase actually does. This sounds obvious, but JPM is not a simple company. It's the largest U.S. bank by assets, and it operates across four major segments: Consumer and Community Banking, Corporate and Investment Bank, Commercial Banking, and Asset and Wealth Management. Each segment has its own revenue drivers, margin profile, and risk exposure.
Consumer and Community Banking is the retail side. Think checking accounts, credit cards, mortgages, and auto loans. Revenue here depends heavily on consumer spending patterns and interest rate spreads. Corporate and Investment Bank handles trading, advisory, and capital markets. This segment's revenue can swing significantly quarter to quarter based on deal flow and market volatility. Commercial Banking serves mid-size companies with lending and treasury services. Asset and Wealth Management earns fees on assets under management.
Why does this matter? Because when you analyze JPM, a headline revenue number doesn't tell you much. You need to know which segments are growing, which ones are under pressure, and how the mix shifts over time. Pull up JPM's stock research page and look at revenue breakdowns by segment as your first step.
Diversified bank model: A bank that operates across multiple business lines such as retail banking, investment banking, and asset management. Diversification can stabilize earnings, but it also means you have more moving parts to analyze.
What financial health metrics matter most for a bank stock?
Here's the thing about bank stocks: the standard metrics you'd use for a tech company or a retailer don't work the same way. Banks have their own financial language, and if you skip learning it, your JPM due diligence will miss the point entirely.
Net interest margin (NIM)
This is the spread between what a bank earns on its loans and investments versus what it pays on deposits. For JPM, NIM tells you how efficiently the bank turns its balance sheet into profit. A wider spread means more earnings per dollar of assets. NIM typically ranges from about 1.5% to 3.5% for large U.S. banks, and where JPM falls in that range relative to peers like Bank of America or Wells Fargo tells you a lot about its competitive positioning.
Net interest margin (NIM): The difference between interest income earned on loans and interest paid on deposits, expressed as a percentage of average earning assets. It's the core profitability measure for any traditional bank.
CET1 capital ratio
Common Equity Tier 1 is the bank's core capital as a percentage of its risk-weighted assets. Regulators set minimum thresholds, and JPM, as a globally systemically important bank, faces higher requirements than smaller institutions. If this ratio falls too close to the regulatory minimum, the bank may need to cut dividends or raise capital. You want to see a comfortable buffer above the minimum.
Return on tangible common equity (ROTCE)
This measures how much profit the bank generates relative to shareholder equity, excluding goodwill and intangible assets. JPM has historically posted ROTCE figures that outpace most large-bank peers. A consistently high ROTCE often indicates strong management and efficient capital allocation. For large U.S. banks, anything above 15% is generally considered strong.
Provision for credit losses
This is the money a bank sets aside to cover loans it expects won't be repaid. When provisions spike, it signals the bank sees trouble ahead in its loan portfolio. When they decline, it suggests improving credit conditions. Watch the trend over multiple quarters rather than fixating on a single number.
Efficiency ratio
Total non-interest expense divided by total revenue. Lower is better. An efficiency ratio below 60% for a large diversified bank is solid. JPM's ability to manage costs across its massive operation is one of the reasons the stock often commands a premium to peers.
How to analyze JPM's valuation compared to other banks
Valuation for bank stocks is a different game. Price-to-earnings ratios can work as a starting point, but they miss critical nuance. The go-to metric for banks is price-to-tangible-book value (P/TBV).
Tangible book value strips out goodwill and intangible assets, giving you a cleaner picture of what the bank's hard assets are worth. A bank trading at 1.0x tangible book is priced at roughly what its net assets are worth. Above 1.0x means the market expects the bank to generate returns above its cost of equity. JPM has historically traded at a premium to peers on this metric, which reflects the market's confidence in its management and earnings power.
To put this in context: if a large bank has a ROTCE of 10% and its cost of equity is also around 10%, it should theoretically trade near 1.0x tangible book. A bank earning well above its cost of equity, as JPM has tended to do, justifies a higher multiple. When you're doing valuation work, compare JPM's P/TBV to its own historical range and to direct peers like Bank of America, Wells Fargo, and Citigroup.
Price-to-tangible-book value (P/TBV): The stock price divided by tangible book value per share. For banks, this is often more useful than P/E because a bank's balance sheet is the business.
You can also look at price-to-earnings, but normalize for the credit cycle. Bank earnings look inflated when loan losses are unusually low and depressed when provisions spike. Try to estimate mid-cycle earnings rather than taking the latest quarter at face value.
Where does JPM stand competitively in banking?
Competitive positioning is where your JPMorgan Chase research guide moves from numbers to narrative. JPM has a few structural advantages worth understanding.
First, scale. JPM's sheer size gives it cost advantages in technology spending, compliance infrastructure, and brand recognition. The bank has invested heavily in technology over the past decade, and those investments compound. Smaller banks can't match that spending without squeezing margins.
Second, diversification. When consumer banking softens, investment banking fees or trading revenue can pick up the slack, and vice versa. Not every bank has this optionality. Goldman Sachs, for example, skews heavily toward investment banking and trading. Citigroup has diversification but has struggled with execution. JPM's ability to fire on multiple cylinders simultaneously is a meaningful competitive edge.
Third, management stability. Jamie Dimon has led the bank since 2005, and the consistency shows in capital allocation decisions, risk management during downturns, and strategic acquisitions. Succession planning is worth monitoring, though. Any leadership transition at a bank this large introduces uncertainty.
To assess competitive position yourself, compare JPM's efficiency ratio, ROTCE, and revenue growth to those same peers over a five-year period. Rallies.ai's Vibe Screener can help you filter large-cap bank stocks by financial metrics to quickly see where JPM ranks.
What are the biggest risks to JPMorgan Chase?
No research process is complete without a clear-eyed risk assessment. For JPM, three categories dominate.
Interest rate risk
Banks benefit when rates rise because loan yields typically adjust faster than deposit costs. But the relationship isn't linear. If rates rise too quickly, loan demand can fall, borrowers start defaulting, and the economy slows. If rates fall sharply, NIM compresses. You need to think about where rates are headed and how JPM's balance sheet is positioned for different scenarios. The bank's 10-K filing includes interest rate sensitivity disclosures showing how earnings would change under various rate shifts.
Credit risk
JPM carries a massive loan portfolio across consumer, commercial, and corporate borrowers. When the economy weakens, defaults rise and provisions increase, directly hitting earnings. Pay attention to net charge-off ratios (actual losses) and delinquency rates across the loan portfolio. Rising delinquencies in credit cards or commercial real estate, for instance, are early warning signs.
Regulatory and legal risk
Large banks operate under intense regulatory scrutiny. Stress tests, capital requirements, and new rules can limit buybacks, restrict activities, or increase compliance costs. JPM has also faced significant legal settlements historically. These are hard to predict, but reviewing the "Legal Proceedings" section of the annual report gives you a sense of what's outstanding.
A fourth risk worth flagging: fintech competition. Digital lenders, payment platforms, and neobanks are chipping away at traditional banking products. JPM has been proactive in building digital capabilities, but the competitive pressure isn't going away.
Step-by-step: putting your JPM due diligence together
Here's the practical sequence for how to research JPMorgan Chase stock from scratch. Think of it as a checklist you can adapt for any bank stock.
- Read the business overview. Start with JPM's latest annual report, specifically the section describing each business segment. Understand revenue sources and what drives each segment.
- Pull the key bank metrics. Gather NIM, CET1 ratio, ROTCE, efficiency ratio, and provision for credit losses. Look at trends over at least three to five years, not just the most recent period.
- Compare to peers. Stack JPM's metrics against Bank of America, Wells Fargo, Citigroup, and Goldman Sachs. This gives you context for whether JPM's numbers are strong or just average.
- Assess valuation. Calculate P/TBV and P/E relative to JPM's own history and its peer group. Consider where you think mid-cycle earnings fall.
- Map the risks. Read the risk factors in the 10-K. Pay special attention to interest rate sensitivity, credit quality trends, and regulatory developments.
- Form a thesis. After all that, you should be able to articulate why JPM might outperform or underperform from here. Write it down. A clear thesis keeps you honest.
If you want to accelerate this process, the Rallies AI Research Assistant can walk you through each of these steps conversationally. Ask it about any metric or risk factor, and it will break down what you're looking at.
Common mistakes when researching bank stocks
A few pitfalls trip up even experienced investors when analyzing JPM or any large bank.
- Using the wrong metrics. Applying SaaS-style revenue growth analysis to a bank will mislead you. Banks are balance-sheet businesses. Focus on NIM, ROTCE, and capital ratios.
- Ignoring the credit cycle. Bank earnings look fantastic near the peak of a credit cycle when loan losses are minimal. They look terrible near the bottom. Always try to think about normalized or mid-cycle earnings.
- Treating all segments equally. JPM's investment banking arm has a completely different risk profile than its consumer lending business. Don't average them together and call it a day.
- Skipping the footnotes. Bank financial statements are dense, but the footnotes on loan quality, derivatives exposure, and off-balance-sheet items contain information that matters. At minimum, skim the credit quality disclosures.
Try it yourself
Want to run this kind of analysis on your own? Copy any of these prompts and paste them into the Rallies AI Research Assistant:
- Walk me through how to research JPM step-by-step — what should I look at first to understand their business model, financial health, and competitive position in banking? What are the key metrics and risks that matter most for a bank stock like this?
- If I'm researching JPMorgan Chase for the first time, what's the step-by-step process? What should I look at first?
- Compare JPM's ROTCE, efficiency ratio, and CET1 capital ratio to Bank of America and Wells Fargo. Where does JPM have an edge?
Frequently asked questions
What is the best way to start a JPM due diligence process?
Start with the business model. Read JPM's annual report to understand how each of its four segments generates revenue. Once you have that foundation, the financial metrics and risk factors will make much more sense. Jumping straight to valuation without understanding the business is a common mistake.
What metrics should I focus on in a JPMorgan Chase research guide?
The five most important metrics for JPM are net interest margin, CET1 capital ratio, return on tangible common equity, efficiency ratio, and provision for credit losses. These capture profitability, capital strength, operational efficiency, and credit risk in a way that standard metrics like P/E alone cannot.
How do I analyze JPM's valuation relative to other banks?
Use price-to-tangible-book value as your primary valuation metric. Compare JPM's P/TBV to its own five-year historical range and to direct peers like Bank of America, Wells Fargo, and Citigroup. A bank that consistently earns above its cost of equity deserves to trade above 1.0x tangible book.
What makes bank stock research different from other sectors?
Banks are balance-sheet businesses, not operating businesses in the traditional sense. Revenue comes from lending spreads and fees rather than selling products. You need to evaluate capital adequacy, loan quality, and interest rate sensitivity, which aren't relevant for most other sectors.
Is JPMorgan Chase considered a safe bank stock?
JPM has historically been well-capitalized and well-managed relative to peers, which has led to a premium valuation. That said, all bank stocks carry credit cycle risk, interest rate risk, and regulatory risk. "Safe" depends on your investment horizon and risk tolerance. Do your own research and consider consulting a qualified financial advisor before making any investment decisions.
How do I keep my JPM research updated over time?
Monitor quarterly earnings reports for changes in NIM, credit quality trends, and segment performance. Pay attention to Federal Reserve stress test results, which are published annually, and any major regulatory developments. Following market news on Rallies.ai can help you stay informed on material developments without spending hours on research.
Bottom line
Knowing how to research JPMorgan Chase stock comes down to a disciplined sequence: business model first, then bank-specific financial metrics, peer valuation comparison, competitive assessment, and risk mapping. Skip any of these steps and you're making decisions with incomplete information. The framework works for any large bank, not just JPM.
If you're building a broader investing research habit, check out more step-by-step frameworks on the Rallies.ai guides page and practice by running your own analysis with the AI Research Assistant.
Disclaimer: This article is for educational and informational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other type of advice. Rallies.ai does not recommend that any security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Before making any investment decision, consult with a qualified financial advisor and conduct your own research.
Written by Gav Blaxberg, CEO of WOLF Financial and Co-Founder of Rallies.ai.