Is JPMorgan Chase Stock a Buy Now?

Shares of JPMorgan Chase (NYSE: JPM) are up a fantastic 55% over the past year, strongly outperforming the S&P 500 index's 26% gain. The banking giant has successfully leveraged a resilient economic backdrop into a record year for profitability.

This momentum was evident in its latest fourth-quarter earnings report (for the period ended Dec. 31), which exceeded Wall Street expectations. The bank posted Q4 earnings per share (EPS) of $4.81, up 58% from last year.

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With the stock trading near a record high, investors may be wondering if the rally has further room to run or if the opportunity has already passed. Let's discuss whether JPMorgan Chase stock is a buy now.

JPMorgan's record year by the numbers

The allure of JPMorgan Chase as an investment starts with its dominant position as the largest U.S. bank, bolstered by a globally diversified financial services footprint. Its size and scale have proven to be a significant advantage during a period in which smaller institutions have struggled to rebuild market confidence following the 2023 industry turmoil that saw several regional banks collapse. In this case, JPMorgan has consolidated its market share by attracting deposits from a growing client base.

These dynamics have powered an impressive set of operating and financial results. Even with the Federal Reserve cutting interest rates last year, pressuring the bank's net interest income, Q4 revenue rose 11% year over year.

The investment banking division stood out particularly well, with fees surging 49% from last year, reflecting an improved environment for deal-making, as well as larger mergers and acquisitions. The strong performance in global asset prices contributed to a 21% increase revenue from the markets and securities services group and also helped drive client assets under management up 18% compared to the end of 2023. Meanwhile, the consumer business continues to show strength through solid debit and credit card sales.

Perhaps the most significant development has been the stable credit conditions. Compared to fears of widespread delinquencies in the loan portfolio in recent years, the Q4 provision for credit losses at $2.6 billion was down 15% sequentially from Q3 and 5% lower from the prior-year quarter. This trend has kept costs subdued and drove full-year EPS to $19.75 per share, up from $16.23 in 2023. Overall, JPMorgan has reaffirmed its position as a blue chip stock with industry-leading fundamentals.

Image source: Getty Images.

What's next for JPMorgan in 2025?

How JPMorgan Chase performs in 2025 will largely depend on how economic conditions evolve. A backdrop of a firm labor market and durable credit conditions would support the bank's income growth. Investors comfortable with this baseline scenario have good reason to buy or hold the stock.

On the other hand, when considering any investment, it's important to examine it critically and think about what could go wrong. While projecting optimism in the outlook by citing the still-low unemployment rate and improving business optimism in the U.S. into the new year, comments by CEO Jamie Dimon also offered a word of caution. He specifically highlighted inflationary pressures and volatile geopolitical conditions as primary risks within the bank's range of possible scenarios.

Simply put, if inflation accelerates while the economy slows, JPMorgan's results would likely suffer. Investors must weigh several uncertainties, including interest rate trajectories, fiscal policy under the new Trump administration, and the Federal Reserve's future moves that could impact the stock.

Beyond these factors, JPMorgan's shares appear relatively expensive, trading at 2.2 times book value, well above the decade average of 1.5. Separately, the stock's dividend yield of about 1.9% has settled near its 10-year low. While this premium valuation doesn't necessarily signal the stock needs to be sold off, my interpretation is that it may limit the upside potential in the near term.

JPM Price to Book Value data by YCharts

Decision time: I'm on the sidelines

There's a lot to like about JPMorgan Chase, which is well-positioned to reward shareholders over the long run. That said, I believe the stock is just a bit too pricey following the spectacular rally over the past year to jump in and buy with bullish conviction. Ultimately, investors may find more compelling stocks with better value elsewhere.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.