NEW YORK (TheStreet) -- Sliding bank stock prices over the past two months have set up some remarkably low forward price-to-earnings multiples for long-term investors to consider.
Using data supplied by Thomson Reuters Bank Insight -- formerly HighlineFI -- TheStreet has identified a list of five actively traded bank stocks trading for less than 8.3 times consensus 2013 earnings estimates, with the largest price declines since March 19, through Tuesday's close.
We used March 19 as a starting date, because that is the day we pulled data for our previous look at bank stocks trading at low forward price-to-earnings multiple.
In the previous story, we pointed out that some of the best-known U.S. banking names were trading at roughly eight times forward earnings. Now they forward P/E's are much lower, for three of the largest U.S. bank holding companies, indicating a possible overreaction by the market.FIG Partners analyst John Rodis said in march that , "prices tend to overshoot," both on the upside and the downside, and we may be seeing that with JPMorgan Chase (JPM) -- in the wake of the CEO James Dimon's disclosure last Thursday of a $2 billion second-quarter loss from hedging activity -- which was partially offset by $1 billion in gains on available-for-sale securities. JPMorgan's shares pulled back 11% over the next three trading sessions through Tuesday, and the shares were trading at a forward P/E of less than 6.5. In March they traded for just over eight times the consensus 2013 earnings estimate among analysts polled by Thomson Reuters. Since March 19, the KBW Bank Index (I:BKX) declined 10% through Tuesday's close at 44.83. Bank stocks seem to be following last year's pattern, pulling back after first-quarter euphoria. Investors are understandably skittish over the largest industry names, from fear of a new round of regulatory scrutiny, following JPMorgan's trading loss, as well as the already confusing Volker Rule implementation, lingering mortgage putback demands and the need for banks to continue shoring up their capital levels. But there is no question that the group is much more strongly capitalized than it was heading into the 2008 banking crisis, and the current panic over JPMorgan Chase could be just what the doctor ordered, for long-term investors methodically building positions. For JPMorgan in particular, the well-timed share repurchases could benefit shareholders greatly. The following is our list of five actively traded bank stocks trading for less than 8.3 times consensus 2013 earnings estimates, with the largest price declines since March 19, through Tuesday's close. All have seen significant declines for the 52-week period, as you can see in the charts. The stocks are sorted by descending forward P/E:
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV