Bank of America (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) are both large-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.
Profitability
This table compares Bank of America and JPMorgan Chase & Co.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Bank of America | 21.64% | 10.64% | 1.05% |
| JPMorgan Chase & Co. | 21.61% | 12.52% | 1.04% |
Valuation & Earnings
This table compares Bank of America and JPMorgan Chase & Co.'s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Bank of America | $113.59 billion | 1.83 | $27.43 billion | $2.94 | 8.17 |
| JPMorgan Chase & Co. | $142.42 billion | 2.06 | $36.43 billion | $10.48 | 9.19 |
JPMorgan Chase & Co. has higher revenue and earnings than Bank of America. Bank of America is trading at a lower price-to-earnings ratio than JPMorgan Chase & Co., indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Bank of America and JPMorgan Chase & Co., as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Bank of America | 1 | 11 | 12 | 0 | 2.46 |
| JPMorgan Chase & Co. | 0 | 9 | 13 | 0 | 2.59 |
Bank of America currently has a consensus target price of $29.7778, suggesting a potential upside of 23.97%. JPMorgan Chase & Co. has a consensus target price of $111.9868, suggesting a potential upside of 16.33%. Given Bank of America's higher possible upside, equities research analysts plainly believe Bank of America is more favorable than JPMorgan Chase & Co..
Risk and Volatility
Bank of America has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, JPMorgan Chase & Co. has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.
Dividends
Bank of America pays an annual dividend of $0.72 per share and has a dividend yield of 3.0%. JPMorgan Chase & Co. pays an annual dividend of $3.60 per share and has a dividend yield of 3.7%. Bank of America pays out 24.5% of its earnings in the form of a dividend. JPMorgan Chase & Co. pays out 34.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bank of America has raised its dividend for 6 consecutive years and JPMorgan Chase & Co. has raised its dividend for 9 consecutive years. JPMorgan Chase & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
69.0% of Bank of America shares are owned by institutional investors. Comparatively, 71.4% of JPMorgan Chase & Co. shares are owned by institutional investors. 0.2% of Bank of America shares are owned by insiders. Comparatively, 0.8% of JPMorgan Chase & Co. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Summary
JPMorgan Chase & Co. beats Bank of America on 12 of the 17 factors compared between the two stocks.
