For many investors, and not a few analysts, JPMorgan Chase (NYSE: JPM) is best-in-class among the large U.S. banks. Led by longtime Chief Executive Officer Jamie Dimon, the company is a powerhouse in numerous segments of banking, including but certainly not limited to commercial lending, investment banking, and credit card issuance.

In fact, its stock is the best performer year to date among the big four U.S. banks, which also includes Bank of America, Citigroup, and Wells Fargo. It also happens to be the only member of the quartet that is currently outpacing the S&P 500 index so far this year. Its encouraging fundamental performance puts JPMorgan Chase on top of those rankings, but there has been a hiccup or two lately. Are its shares worth adding to your portfolio regardless?

Much of JPMorgan Chase's prominence comes from pure size. It's on top of the banking heap in this country in terms of core fundamentals like revenue and total assets, and its stock is the clear No. 1 when measured by market cap. It's also got the largest footprint, with more than 5,100 branches throughout the country.

Relatively high interest rates can constrict banks, leading to less borrowing -- a foundational activity for lenders. The elevated rates that have been a staple of the U.S. economy in recent years haven't put a dent in JPMorgan Chase's business, though. It's still managing to post solid growth in certain key segments.

Its second-quarter results, released in mid-July, were distorted by a large ($7.9 billion) sale of Visa stock on its books. That helped net revenue zoom 22% higher year over year to $50.2 billion, and net income advance 25% to more than $18.1 billion. Still, the bank managed to top average analyst estimates on both the top and bottom lines.

The beautiful thing about JPMorgan Chase is the diversification of its business, which hedges against the inevitable cyclical dips in traditional lending activities. The company has allocated resources to some of the most resilient and profitable financial services segments, and continues to reap the rewards.

The company's commercial and investment bank (CIB) segment was buoyed by the still-robust capital markets, in which it is a prominent operator in many activities. CIB's revenue rose by 9% to nearly $18 billion, thanks to a 46% surge for the investment banking unit, which brought in $2.5 billion. This filtered down to net income of just under $5.9 billion for CIB, good enough for a 11% gain. It also comprised nearly a third of the company's overall bottom line for the period.

Asset and wealth management, meanwhile, tends to be quite a lucrative endeavor if done right. Over the years JPMorgan Chase has scaled up this business effectively, and it continues adding to revenue and profitability. Its take for the quarter was up 6% to almost $5.3 billion, with net profit edging 3% higher to nearly $1.3 billion.

The second quarter was only the latest of a string of impressive results for the company. The downside of sustained outperformance, however, is that it raises expectations to the point where they might not be realistic. In mid-September management felt compelled to damp these expectations, specifically for growth in net interest income (NII), a crucial profit metric for banks. JPMorgan Chase Chief Operating Officer Daniel Pinto went as far as to say the average analyst estimate of $90 billion in NII for full year 2025 was "not very reasonable."

What might be more reasonable is a slump in fundamentals next year. Interest rates are almost certainly going to decline by the end of 2024, as inflation seems to be melting away. Although lower rates are a boon in one sense for a bank, because they increase demand for loans, they eventually cut into NII. This is what management is anticipating.

At the moment, analysts are still modeling healthy gains in revenue and profitability this year, although again this is distorted by the recent Visa stock sale. Such an event at that scale is unlikely to repeat in 2025, certainly a key additional reason those pundits expect a nearly 4% year-over-year drop in revenue for next year, and a 7% fall in per-share profit.

Personally, I don't think that puts JPMorgan Chase on the ignore (or even sell) list. Given its recent torrid growth, and its always-ready-to-pounce potential for more, I wouldn't be at all surprised if the company does better than analysts expect. Those banking-adjacent segments are large and growing, and the company does a good job keeping them hot. Meanwhile in terms of valuation the stock feels like a bargain; the forward P/E is only 12, modest even when accounting for the expected 2025 dips.

Ultimately, then, my take is that investors are being unnecessarily cautious about JPMorgan Chase these days. As long as the U.S. economy keeps humming, the bank will too. Even if the economy doesn't do all that well, management will find a way to earn a solid buck. The bank's stock is undoubtedly a buy, in my view.

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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, and Visa. The Motley Fool has a disclosure policy.

JPMorgan Chase: Buy, Sell, or Hold? was originally published by The Motley Fool