Benzingaยท2025-09-29 20:00Core Viewpoint - Jim Cramer suggests that JPMorgan Chase & Co and Goldman Sachs Group Inc are undervalued based on their price-to-earnings (P/E) ratios, despite general investor sentiment being cautious about financial stocks [1][5]. Valuation Analysis - JPMorgan trades at approximately 15.6 times forward earnings, while Goldman Sachs is around 15.3 times, significantly lower than the S&P 500's 24 times multiple, indicating a substantial valuation gap [2]. - The current valuation discounts are attributed to concerns over interest rates and credit risks, which have historically affected bank valuations [2]. Potential Catalysts - If the Federal Reserve's easing cycle occurs, net interest margins may stabilize, leading to a rebound in deal-making activities, which could enhance the attractiveness of current valuations [3]. - There is a resurgence in Wall Street's M&A activities, with pipelines rebuilding and capital markets becoming more active, potentially increasing fee income for both banks by 2026 [3]. Share Buybacks - Both banks are actively engaging in stock buybacks, with JPMorgan repurchasing nearly $3 billion in stock last quarter, which can enhance earnings per share (EPS) without relying on significant loan growth [4]. Investment Perspective - The current valuations of JPMorgan and Goldman Sachs present an opportunity for investors, as they are trading below market multiples, suggesting a potential for upside if market conditions improve [5]. - The "boring" nature of bank stocks may lead to unexpected gains if interest rates ease and deal-making accelerates, making the current investment proposition appealing for those willing to hold [5].