JPMorgan (NYSE:JPM) Touts Stock Buybacks Despite Valuation 

JPMorgan (JPM) will increase the pace of stock buybacks as it responds to a record year for profits and mounting cash pile.

Despite CEO Jamie Dimon suggesting last May, when the stock was trading around $190, that the bank would not be buying back stock at elevated prices, it seems a “high class problem” is now due some attention. 

JPM, which is now trading around $252, has just reported a record year for profit and revenue, and has up to $35 billion in excess capital that it does not need for regulatory purposes. 

Like other Wall Street banks, JPM had stockpiled cash in preparation for Basel 3 regulations, but the incoming Trump administration is likely to offer a light tough regime that waters down capital requirements. 

“We have enough excess. And given that, we would like to not have the excess grow from here,” CFO Jeremy Barnum said on the analyst earnings call. 

“Given the amount of organic capital generation that we’re producing, it means that unless we find in the near-term opportunities for organic deployments or otherwise, it means more capital return through buybacks.” 

However, Barnum caveated those remarks by reiterating that the bank does not want to get into the business of guiding on buybacks. 

JPM CEO Eats His Words

Last May, Dimon said the bank would not buy back stock “at these prices,” saying it made no sense to do more buybacks when the stock was trading at more than two times book value. 

Since then, the stock is up more than 20% after a record year. Profits for last year rose to $58 billion, the most ever for an American bank.

Is JPM Stock a Good Buy Now?

Overall, Wall Street has a Moderate Buy consensus rating based on 10 Buys, seven Holds, and one Sell. Over the past year, JPM has surged by more than 53%, and the average JPM price target of $260.71 implies an upside potential of 3% from current levels.

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