JP Morgan stock is too expensive | Wilnesh News

Jamie Dimon thinks stocks JPMorgan Very expensive.

That was the message the bank’s longtime chief executive delivered to analysts at JPMorgan Chase’s annual investor conference on Monday. Dimon didn’t mince words when asked about the timing of a potential increase in banks’ stock buyback programs.

“I want to be clear, okay? We’re not buying back a lot of stock at these prices,” Dimon said.

Shares of JPMorgan Chase, the largest U.S. bank by assets, have soared 40% in the past year, reaching a 52-week high of $205.88 on Monday before Dimon’s comments took a toll on the stock. The 12-month performance outperformed other banks, particularly smaller businesses recovering from the regional banking crisis in 2023.

This also makes the stock relatively expensive (as measured by price versus tangible book value, a common industry metric). JPMorgan stock recently traded at about 2.4 times book value.

“Repurchasing a financial company’s stock for substantially more than twice its tangible book value is a mistake,” Dimon said. “We’re not going to do that.”

Dimon’s comments about his company’s stock, and his admission The possible imminent retirement sent the bank’s shares down 4.5% on Monday.

To be clear, JPMorgan has been buying back its shares under a previously authorized buyback program.The bank resumed repurchases early last year pause Accumulate capital based on new expected guidelines.

Dimon’s guidance simply means the program is unlikely to be beefed up anytime soon. Portales Partners analyst Charles Peabody wrote in a March research note that JPMorgan Chase could buy shares for $2 billion to $2.5 billion per quarter.

The JPMorgan CEO has often resisted pressure from investors and analysts he sees as short-sighted. When interest rates are low, Dimon maintains a relatively high level of cash rather than putting money into low-yielding, long-term bonds.This helped JPMorgan surpass other banks, including Bank of Americawhen interest rates jump higher.

Dimon’s desire to hoard cash isn’t just about impending capital rules. On Monday, he repeatedly said he was “cautiously pessimistic” about economic risks, including those related to inflation, interest rates, geopolitics and a reversal of the Federal Reserve’s bond-buying program.

Dimon said the market currently underestimates these risks. For example, Dimon said the price of high-quality corporate bonds does not fully reflect underlying financial stress.

“Investment-grade credit spreads are almost at their lowest ever, which would be completely wrong,” Dimon said. “It’s just a matter of time.”

From 2022 onwards, Dimon warned that geopolitical risks and quantitative tightening would trigger an economic “hurricane.” While the economy’s continued strength surprised many on Wall Street, including Dimon, his concerns have shaped his decision-making process ever since.