JPMorgan Chase Just Authorized a $50 Billion Buyback and Raised Its Dividend. Is the Stock a Buy Near Record Highs?
JPMorgan Chase passed the Fed's stress test, announcing a $50 billion share buyback and a 10% dividend increase. Despite strong financial results and high capital ratios, the stock trades near record highs with valuation multiples above five-year averages. Consequently, the article suggests the stock is expensive and recommends it for a wishlist rather than immediate purchase, noting that a recession might offer better value.
JPMorgan Chase (JPM 0.11%) is one of the world's largest financial companies, trailing only Berkshire Hathaway (BRKA +1.41%)(BRKB +1.40%). That said, the giant bank got some very good news when the Federal Reserve announced that it had passed the Fed's bank stress test. And JPMorgan Chase shareholders benefited, too, since the bank quickly announced a 10% dividend increase and a $50 billion share repurchase plan.
JPMorgan Chase is in a strong position
The first big takeaway from the Fed's bank stress test is that JPMorgan Chase is a financially solid bank. Notably, the Fed is looking for a tier 1 capital ratio of 11.5%, but the bank's tier 1 ratio was 14.3%. The tier 1 ratio indicates how well prepared a bank is for adversity, with higher numbers indicating better preparedness. Clearly, JPMorgan Chase is not only one of the largest banks in the world but also among the strongest.
Image source: Getty Images.
That alone, however, isn't enough to make the stock worth buying. It is also putting up strong financial results, with growth across its business in the first quarter of 2026. Earnings per share rose 17% year over year, with return on tangible common equity increasing by two percentage points. All in, there are many reasons to like JPMorgan Chase today.
NYSE: JPM
Key Data Points
Don't run out and buy JPMorgan Chase just yet
The problem with this story is that Wall Street is well aware of the company's success. In fact, the stock is trading just below its all-time highs. The stock's price-to-sales, price-to-earnings, and price-to-book ratios are all above their five-year averages, and by meaningful amounts. To put some numbers on that, the stock's P/S ratio sits at 4.8x, versus a five-year average of 3.6x. The current P/E ratio is roughly 15.5x compared to a longer-term average of around 11x. And the P/B ratio is 2.5x compared to the five-year average of just under 1.8x.
Simply put, JPMorgan Chase is looking rather expensive today. Even the company's forward P/E ratio is notably out of line with its past, sitting at 14.9x compared to a five-year average of 12x. A large dividend hike and stock buyback plan won't change the valuation facts here, even if they are nice to see. For investors who have even the slightest value lean, this looks like a stock for the wishlist, not the buy list, today. A recession and/or a bear market could make this large, well-run bank a more attractive value.
