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Is JPMorgan Stock a Safe Bet Amongst Bank Stocks?

Options bears have been targeting JPM puts lately

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JPMorgan Chase & Co. (NYSE:JPM) is the world's largest bank by market capitalization, at $333.5 billion. At last check, JPM was down 1.3% to trade at $112.28, extending a period of lackluster price action that kicked off earlier in the summer.

JPMorgan stock is down 29% in 2022, with recent rallies turned away by its 100-day moving average. However, the shares do offer an attractive valuation, trading at a forward price-earnings ratio of 10.20 and a price-sales ratio of 2.84. In addition, JPM offers a high dividend yield of 3.5% at a forward dividend of $4.00.

JPMorgan Chase & Co. also provides some well-rounded fundamentals. Although the bank is expected to end fiscal 2022 with a 27.1% decrease in earnings and just a 1.3% increase in revenues, JPM has maintained consistent growth over multiple years. Between fiscal 2018 and fiscal 2021 the bank saw 11.6% revenue growth and 51.4% net income growth.

Additionally, the company is estimated to generate a 12.2% increase in earnings and an 8.2% increase in revenues for fiscal 2023, potentially setting JPMorgan stock up for a nice recovery over the next 1-2 years. Furthermore, the banking company holds a strong balance sheet with $1.43 trillion in cash and $640.74 billion in total debt, offering value and dividend investors a relatively safe option as well.

Options traders have been betting bearishly lately. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), JPM's 50-day put/call volume ratio of 0.63 ranks in the 91st percentile of its annual range. So while calls still outflank puts on an absolute basis, the high percentile rank indicates the rate of put buying relative to call buying has been quicker than usual. 

 

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