JPMorgan Chase & Co.
Mr. Market is asking $356.95 for the business today.
The business is worth approximately $181.00.
That is a Δ of -49.3% from price to fair value. Mr. Market wants more for JPM than the business is worth. We would pass.
Banks don't fit the standard Owner Earnings DCF — operating cash flow at a deposit-and-loan business is dominated by deposit and securities-portfolio activity rather than owner-distributable cash. The intrinsic-value figure above comes instead from the Gordon residual model: tangible book value per share, scaled by the spread between return on equity and the cost of equity.
TBV $106.66/share × 1.70× book multiple · ROE 14.0% · COE 10.0% · g 4.2%.
Show the full Gordon input bridge ↓
| Total stockholders' equity (latest annual) | $362.44B |
| Less: goodwill & intangible assets | ($64.46B) |
| Tangible book value | $297.98B |
| ÷ diluted weighted-average shares | 2,793,700,000 |
| TBV per share | $106.66 |
| Year 1 | 9.59% |
| Year 2 | 12.68% |
| Year 3 | 14.07% |
| Year 4 | 10.78% |
| Year 5 | 16.86% |
| Year 6 | 12.85% |
| Year 7 | 15.98% |
| Year 8 | 17.39% |
| Year 9 | 16.13% |
| Average ROE (used as input) | 14.04% |
| Cost of equity (10Y Treasury + 5pp, floored at 10%) | 10.00% |
| Sustainable growth g (ROE × 30% retention, capped at 5%) | 4.21% |
| Book multiple = (ROE − g) / (COE − g) | 1.697× |
| IV per share = TBV/share × multiple | $181.00 |
- Operating cash flow is -147,782,000,000 — must be positive.
- Validation flagged: Operating cash flow is -147,782,000,000 — must be positive.
- Only 3 forward year-over-year EPS growth link(s) available from analyst consensus (spec calls for 5). G1 is the average of what we have.
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The Reckoning
Eight steps. Every input is visible. Every formula is on the page. The same protocol is applied to every stock — consistency is most of the discipline.
Data validation
Garbage in, garbage out. Before any math runs, we confirm we have what the protocol requires.
| Operating Cash Flow > 0 | ✗ |
| Depreciation & Amortization exists | ✓ |
| Diluted shares outstanding > 0 | ✓ |
| At least 3 forward EPS estimates (we have 10) | ✓ |
Owner Earnings = OCF − D&A
From Buffett's 1986 Berkshire annual letter. Owner Earnings is the cash a business produces after spending what is necessary to maintain its current productive capacity. We use depreciation & amortization as the proxy for that maintenance reinvestment — “vaguely right rather than precisely wrong.”
Bank — D&A is not a meaningful proxy for maintenance reinvestment in a deposit-and-loan business. For this business, Owner Earnings = Operating Cash Flow only.
| Operating Cash Flow (latest annual) | -$147.78B |
| Depreciation & Amortization | n/a (sector exception) |
| Fiscal period end | Owner Earnings | Note |
|---|---|---|
| 2025-12-31 | -$147.78B | |
| 2024-12-31 | -$42.01B | ← median (used as headline OE) |
| 2023-12-31 | $12.97B |
Spec (Stage 1) smooths Owner Earnings via the median of the last three annual filings. The median trims outliers symmetrically — a single bad year or a single working-capital swing no longer dominates. If the median itself comes out non-positive, that flows through to the IV honestly (no rescue to a best-positive year).
| Owner Earnings (smoothed, headline) | -$42.01B |
Growth — analyst consensus, capped, then faded to GDP
G1 is the simple average of the year-over-year EPS growth rates we can compute from the available forward analyst consensus — up to five years out from the latest actual, fewer when fewer estimates are on file — capped at 20% and floored at 0%. G2 is forecasted U.S. real GDP growth — no business compounds faster than the overall economy forever. Between them, growth fades linearly.
| From → To | EPS | → EPS | YoY growth |
|---|---|---|---|
| 2025 → 2026 | 20.05 | 24.76 | +23.5% |
| 2026 → 2027 | 24.76 | 25.16 | +1.6% |
| 2027 → 2028 | 25.16 | 27.25 | +8.3% |
| G1 mean (3-yr available forward chain) | 11.1% |
| G1 median (sanity check) | 8.3% |
| G1 cap / floor | 0% / 20% |
| G1 (clipped) | 11.1% |
| G2 (forecasted U.S. real GDP) | 2.3% |
DCF projection, terminal, and IV — not applicable for banks
The standard Owner Earnings DCF (steps III, V, and VI in the protocol) is structurally wrong for a deposit-and-loan business and we suppress it entirely on bank Quote pages. The intrinsic value at the top of this page comes from the Gordon residual model— tangible book value × (ROE − g) / (COE − g) — which is documented in full in the “Banking-specific model in use” section above. Step IV (the discount rate) is still shown below because it feeds the cost-of-equity input to Gordon.
Discount rate — 10-year Treasury
The discount rate is the required rate of return — the minimum we demand to justify owning this business instead of a risk-free Treasury bond. Buffett anchors here for a reason: if a stock can't generate returns above the risk-free rate after accounting for its uncertainty, it is not an attractive investment.
| 10-year U.S. Treasury yield | 4.95% |
| Risk premium added | 0.00% |
| Discount rate (r) | 4.95% |
10Y Treasury 4.95%
Margin of safety
Intrinsic value is an estimate, not a fact. The margin of safety is the buffer that protects against being wrong. Default 25%; raise it for lower-quality businesses or higher-uncertainty situations.
| Intrinsic value per share | $181.00 |
| Margin of safety (rate) | 25% |
| Buy price (IV × (1 − MoS)) | $135.75 |
JPM — JPMorgan Chase & Co.
| Symbol | JPM |
| Mr. Market’s asking price | $356.95 |
| Intrinsic value (with 25% MoS) | $135.75 |
| Δ% vs current price | -49.3% |
| Operating Cash Flow (latest annual) | -$147.78B |
| G1 / G2 | 11.1% / 2.3% |
| Mr. Market’s mood | MANIC |
| Final verdict | ASKING TOO MUCH |
Mr. Market DiagnosticsBuffett-style screens (not in canonical protocol)Two supplementary checks we keep around but do not use to drive the BUY signal: an 8-dimension business-durability screen, and Buffett's 2010 Two-Column cross-check. Click to expand.
[ Expand ]
Two supplementary checks we keep around but do not use to drive the BUY signal: an 8-dimension business-durability screen, and Buffett's 2010 Two-Column cross-check. Click to expand.
Score: 25 / 100
| Check | Threshold | Observed | Verdict |
|---|---|---|---|
| ≥5 years of financial history (free-tier window) | >= 5 | 10 | ✓ |
| Positive net income every year of last 5 | 5 / 5 | 5 / 5 | ✓ |
| FCF (CFO − CapEx) positive in all of last 5 years | 5 / 5 | 3 / 5 | ✗ |
| Operating-margin coefficient of variation ≤ 0.15 | ≤ 0.15 | 0.28 | ✗ |
| EPS predictability R² ≥ 0.80 (5-yr trend fit) | >= 0.80 | 0.66 | ✗ |
Implied IV: $1,074.24
| Column A (cash + securities − debt) per share | $814.39 |
| Sector multiple used | 10× pre-tax operating income |
| Column B (operating EPS × multiple) | $259.85 |
| Two-Column IV per share | $1,074.24 |
The Sources
Every number above traces back to a specific external source. Company fundamentals (cash flow, income statement, balance sheet) come from the company's own SEC filings, fetched through Financial Modeling Prep's normalized GAAP schema. The 10-year and 30-year U.S. Treasury yields come from FMP's daily Treasury constant-maturity series. Analyst-consensus EPS estimates come from FMP. The terminal growth rate G2 is computed from the Federal Reserve's FRED real-GDP series (GDPC1), trailing-4-quarter YoY-YoY, with a Supabase-backed last-known-good fallback if FRED is temporarily unreachable. The raw inputs follow.
Cash flow (most recent)
| Net income | $57.05B |
| Operating cash flow | -$147.78B |
| Depreciation & amortization | $8.82B |
| Stock-based comp | $0 |
| Capital expenditure | $0 |
| Free cash flow | -$147.78B |
| Filing date | 2026-02-13 |
Forward analyst EPS estimates
| Year | EPS Avg | Low | High | Analysts |
|---|---|---|---|---|
| 2019 | 10.50 | 10.13 | 10.93 | 5 |
| 2020 | 7.73 | 7.46 | 8.05 | 4 |
| 2021 | 15.04 | 14.52 | 15.66 | 5 |
| 2022 | 11.62 | 11.22 | 12.10 | 7 |
| 2023 | 16.52 | 16.31 | 16.74 | 11 |
| 2024 | 18.59 | 18.25 | 19.02 | 12 |
| 2025 | 20.20 | 20.13 | 20.30 | 4 |
| 2026 | 24.76 | 23.82 | 26.30 | 9 |
| 2027 | 25.16 | 24.04 | 25.82 | 11 |
| 2028 | 27.25 | 25.56 | 30.22 | 8 |