JPMorgan Chase (JPM) vs Bank of America (BAC): the numbers side by side
By Lubin Danilo, founder of Lubin Investment
On our 10 quality criteria, JPMorgan Chase comes out ahead. On price, JPMorgan Chase trades cheapest relative to its free cash flow. In other words, comparing JPMorgan Chase and Bank of America means answering two separate questions, and they do not necessarily have the same answer.
Both stocks side by side
| Metric | JPMorgan Chase (JPM) | Bank of America (BAC) |
|---|---|---|
| Quality score | 7/10 | 6/10 |
| P/FCF | 5.6× | 7.3× |
| Sector | Banks Diversified | Banks Diversified |
| Price | 312.37 USD | 53.96 USD |
| Market cap | 933.4B | 454.5B |
Quality: which one passes more criteria
JPMorgan Chase passes 7/10 of our quality criteria, against 6/10 for Bank of America. The criteria are identical for both: profitability, revenue and free cash flow per share growth, share count control, free cash flow margin, margin expansion, return on capital, debt, conversion of earnings into cash, and cash conversion cycle. No weighting, no opinion: it is a count.
Price: which one is cheaper
JPMorgan Chase trades at 5.6× its free cash flow, against 7.3× for Bank of America. A lower multiple means you pay fewer years of cash for the same slice of the business. Mind the reflex though: a low multiple is only a bargain if the quality holds up. That is why we judge the two separately, and never one through the other.
JPMorgan Chase's accounts are public: 10-K filings with the SEC (EDGAR).
Bank of America's accounts are public: 10-K filings with the SEC (EDGAR).
How to decide
There is no "better stock" in the abstract, there is a better stock for a given goal. If you want the most solid financial quality, follow the score. If you want to pay the least for the cash produced, follow the P/FCF. If both point to the same name, the case is simple. If they diverge, you are trading off paying more for a better business against paying less for a more questionable one. The two detailed pages below give the criterion-by-criterion breakdown for JPMorgan Chase and for Bank of America.
Frequently asked questions
Should you buy JPMorgan Chase or Bank of America?
JPMorgan Chase passes 7/10 of our quality criteria, against 6/10 for Bank of America. The criteria are identical for both: profitability, revenue and free cash flow per share growth, share count control, free cash flow margin, margin expansion, return on capital, debt, conversion of earnings into cash, and cash conversion cycle. No weighting, no opinion: it is a count. JPMorgan Chase trades at 5.6× its free cash flow, against 7.3× for Bank of America. A lower multiple means you pay fewer years of cash for the same slice of the business. Mind the reflex though: a low multiple is only a bargain if the quality holds up. That is why we judge the two separately, and never one through the other.
JPMorgan Chase or Bank of America: which one is cheaper?
JPMorgan Chase : 5.6× against 7.3×.
Can you hold both?
Nothing prevents it, and it is common when both pass our quality criteria. Keep in mind that two companies in the same sector often react to the same shocks, so holding both diversifies less than it looks. This page is a numbers comparison, not a recommendation.