Critical Contrast: JPMorgan Chase & Co. (NYSE:JPM) and Charles Schwab (NYSE:SCHW)

JPMorgan Chase & Co. (NYSE:JPM) and Charles Schwab (NYSE:SCHW) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, dividends, earnings and risk.

Earnings and Valuation

This table compares JPMorgan Chase & Co. and Charles Schwab”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
JPMorgan Chase & Co.	$178.84 billion	4.62	$58.47 billion	$20.19	15.04
Charles Schwab	$22.91 billion	7.32	$5.94 billion	$4.27	22.10

JPMorgan Chase & Co. has higher revenue and earnings than Charles Schwab. JPMorgan Chase & Co. is trading at a lower price-to-earnings ratio than Charles Schwab, indicating that it is currently the more affordable of the two stocks.

Dividends

JPMorgan Chase & Co. pays an annual dividend of $6.00 per share and has a dividend yield of 2.0%. Charles Schwab pays an annual dividend of $1.08 per share and has a dividend yield of 1.1%. JPMorgan Chase & Co. pays out 29.7% of its earnings in the form of a dividend. Charles Schwab pays out 25.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. JPMorgan Chase & Co. has raised its dividend for 15 consecutive years and Charles Schwab has raised its dividend for 1 consecutive years. JPMorgan Chase & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

JPMorgan Chase & Co. has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Charles Schwab has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Insider and Institutional Ownership

71.6% of JPMorgan Chase & Co. shares are held by institutional investors. Comparatively, 84.4% of Charles Schwab shares are held by institutional investors. 0.5% of JPMorgan Chase & Co. shares are held by company insiders. Comparatively, 6.3% of Charles Schwab shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares JPMorgan Chase & Co. and Charles Schwab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
JPMorgan Chase & Co.	20.90%	17.18%	1.31%
Charles Schwab	35.93%	21.26%	1.85%

Analyst Ratings

This is a summary of recent recommendations and price targets for JPMorgan Chase & Co. and Charles Schwab, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
JPMorgan Chase & Co.	3	9	15	1	2.50
Charles Schwab	2	5	16	1	2.67

JPMorgan Chase & Co. currently has a consensus target price of $326.38, suggesting a potential upside of 7.49%. Charles Schwab has a consensus target price of $106.45, suggesting a potential upside of 12.80%. Given Charles Schwab’s stronger consensus rating and higher probable upside, analysts clearly believe Charles Schwab is more favorable than JPMorgan Chase & Co..

Summary

Charles Schwab beats JPMorgan Chase & Co. on 11 of the 17 factors compared between the two stocks.

About JPMorgan Chase & Co.

JPMorgan Chase & Co. is a financial holding company, which engages in the provision of financial and investment banking services. It focuses on investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. It operates through the following segments: Consumer and Community Banking (CCB), Commercial and Investment Bank (CIB), Asset and Wealth Management (AWM), and Corporate. The CCB segment originates and services mortgage loans. The CIB segment makes markets and services clients across fixed income, foreign exchange, equities, and commodities. The AWM segment provides initial capital investments in products such as mutual funds and capital invested alongside third-party investors. The Corporate segment manages its liquidity, funding, capital, structural interest rate, and foreign exchange risks. The company was founded in 1799 and is headquartered in New York, NY.

About Charles Schwab

The Charles Schwab Corporation, together with its subsidiaries, operates as a savings and loan holding company that provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services in the United States and internationally. The company operates in two segments, Investor Services and Advisor Services. It offers brokerage accounts with equity and fixed income trading, margin lending, options trading, futures and forex trading, and cash management capabilities, including certificates of deposit; third-party mutual funds through the Mutual Fund Marketplace and Mutual Fund OneSource service, as well as mutual fund trading and clearing services to broker-dealers; exchange-traded funds; advisory solutions for managed portfolios, separately managed accounts, customized personal advice for tailored portfolios, specialized planning, and full-time portfolio management; banking products comprising checking and savings accounts, first lien residential real estate mortgage loans, home equity lines of credit, and pledged asset lines; and trust custody services, personal trust reporting services, and administrative trustee services. It also provides digital retirement calculators; integrated web-, mobile-, and software-based trading platforms, real-time market data, options trading, premium research, and multi-channel access; self-service education and support tools; online research and analysis tools; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; retirement plan services; mutual fund clearing services; and advisor services, including interactive tools and educational content. The Company operates through branch offices. The Charles Schwab Corporation was incorporated in 1971 and is headquartered in Westlake, Texas.