JPMorgan Valuation Elevated as Q2 Results Show Strong Performance

JPMorgan is operating at near peak conditions, according to recent Q2 results. The bank's record Markets and Investment Banking revenue, combined with a ROTCE of approximately 23%, indicates strong performance.

However, the common stock valuation is considered historically elevated, sitting at around 3.2 times tangible book value and 14.8 times forward PE. This makes the common stock a hold due to multiple compression risk.

In contrast, preferred shares (JPM.PR.M, JPM.PR.K, JPM.PR.J, JPM.PR.L) offer yields of approximately 6.4% with discounted entry points. While rate risk limits immediate upside, the author favors starter positions in preferreds for income due to the common stock's multidimensional risks and limited upside at current valuations.