- (0:45) – Should You Be Jumping Into The Banking Industry?
- (6:20) – Tracey’s Top Stock Picks
- (19:30) – Episode Roundup: JPM, C, BAC, WFC, PNC, UCBI, OSBC
- Podcast@Zacks.com
Welcome to Episode #324 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
The banks have sold off after the collapse of Silicon Valley Bank last month and continue to drift lower. Wall Street is avoiding the banks at all costs. And that includes all three of the major banking categories: the “too big to fail” big four, the regional banks and the thousands of community banks.
But are things really that dire in the entire industry? Or are some banks now values?
First quarter earnings reports will be key. Investors need to tune into the conference calls of their favorite banks because there should be a lot of questions, and answers, about what is going on with deposits, loans and any distress that may exist.
5 Bank Stocks: Values or Traps?
1. JPMorgan Chase (JPM)
JPMorgan Chase falls into the “too big to fail” category of banks. It has a market cap of $376 billion.
Shares of JPMorgan Chase are down 4.9% year-to-date. Earnings are expected to rise 6.2% in 2023 to $12.84 from $12.09. JPMorgan has beat on earnings the last 2 quarters.
Is JPMorgan a deal? It trades with a P/B ratio of 1.4. With banks, a P/B ratio of 1.0 is considered cheap but 2.0 is considered fully valued.
JPMorgan will lead off the first quarter earnings season on Friday, Apr 14, 2023.
2. Citigroup Inc. (C)
Citigroup is also one of the “too big to fail” banks. It has a market cap of $90 billion.
Shares of Citigroup are up 1.5% year-to-date. Earnings, however, are expected to decline 17.4% in 2023 to $5.87 from $7.11. It will join JPMorgan in reporting earnings on Apr 14, 2023.
Citigroup is cheap. It has a P/B ratio of just 0.48. That is well under the 1.0 level that indicates value.
Will you be listening in on Citigroup’s first quarter conference call?
3. The PNC Financial Services Group, Inc. (PNC)
PNC Financial is one of the larger regional banks, headquartered in Pittsburgh. It has a market cap of $49 billion.
Shares of PNC Financial have fallen 22% year-to-date as the regional banks have been hit harder than the too-big-to-fail banks. Earnings are expected to rise in 2023, however. Analysts expect earnings growth of 3.3% to $14.42 from $13.96 last year. But will it be able to do so after the banking crisis?
PNC Financial trades with a P/B ratio of just 1.07, which means it’s cheap.
Will you be tuning in to PNC Financial’s first quarter earnings report on Apr 14, 2023?
4. United Community Banks, Inc. (UCBI)
United Community Banks is a regional southeast bank headquartered in Georgia. It has a market cap of $3.2 billion.
Shares of United Community Banks have fallen 17.7% year-to-date. Earnings, however, are expected to rise 11.3% to $2.96 from $2.66 last year.
United Community Banks has had a rocky earnings surprise record in recent quarters as it has missed three out of the last four quarters. It reports earnings on Apr 18, 2023.
With a P/B ratio of 1.1, is United Community Banks a value?
5. Old Second Bancorp, Inc. (OSBC)
Despite a market cap of just $598 million, Old Second Bancorp still falls within the regional bank category. It is the third largest bank in the Chicagoland area.
Shares of Old Second Bancorp are down 16.5% year-to-date. Earnings, however, are expected to rise 35.6% to $2.21 from $1.63. It has beat the earnings estimate three out of the last four quarters and will report earnings again at the end of April.
Old Second Bancorp has a P/B ratio of 1.3 which isn’t the lowest of these 5 stocks, but is still closer to the “value” level of 1.0.
Is Old Second Bancorp a value or a trap?
What Else do Buy and Hold Investors Need to Know About the Bank Stocks?
Listen to this week’s podcast to find out.
[In full disclosure, Tracey owns shares of OSBC in her personal portfolio and in Zacks Value Investor portfolio.]
Twist on Buffett’s Strategy Finds Hidden Gems with Triple-Digit Potential
No matter what your investing style is, you’re going to want to see this. It’s a simple twist on the stock-picking strategy Warren Buffett has used to put hundreds of billions of dollars on the books at Berkshire Hathaway.
Zacks Value Strategist Tracey developed this strategy to find overlooked stocks likely to deliver gains much bigger (and faster) than the average value investor expects. Recent winners have climbed as much as +348% in less than 2 years.
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
Old Second Bancorp, Inc. (OSBC) : Free Stock Analysis Report
United Community Banks, Inc. (UCBI) : Free Stock Analysis Report
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