NEW YORK ( TheStreet) -- While there are dozens of publicly traded bank stocks, only six actively traded names get a "Buy" rating of A (Excellent) or higher from TheStreet Ratings.
TheStreet Ratings takes a very conservative, long-term approach to stock ratings, placing its emphasis on long-term total returns as well as revenue trends, capital strength and dividends. The ratings also consider short-term performance, financial stability and volatility.
With the banking industry still in recovery mode, many of the best-known industry players are still trading at relatively low multiples to book value and earnings:
- Shares of JPMorgan Chase (JPM) closed at $41.25 Friday, returning 26% year-to-date, following a 20% loss last year. The shares trade for 1.2 times tangible book value, and for eight times the consensus 2013 EPS estimate of $5.20. The consensus 2012 EPS estimate is $4.71. JPMorgan's operating return on average assets (ROA) for the 12-months ended June 30 was 0.79%, according to Thomson Reuters Bank Insight, while its return on average equity (ROE) was 9.55%. The big story for JPMorgan Chase this year has been second-quarter losses of $4.4 billion for the company's Chief Investment Office. Then again, the company still managed to earn a $5.0 billion profit during the second quarter. JPMorgan's stock is rated a B-minus (Good) by TheStreet ratings. A rating of B-minus or higher is a "Buy" rating.
- Bank of America (BAC - Get Report) has seen its shares return 64% year-to-date, through Friday's close at $9.19. The shares trade for 0.7 times tangible book value, and for 10 times the consensus 2013 EPS estimate of 91 cents. The consensus 2012 EPS estimate is 0.55%. Over the past four quarters through June, Bank of America's ROA was 0.52%, while the company's ROE was 4.84%. The low valuation to book reflects the uncertainty over the company's ultimate risk from mortgage repurchase demands, which increased 41% during the second quarter alone, to $22.7 billion as of June 30. Bank of America's stock has a "Hold" rating of C (Fair) from TheStreet Ratings.
- Citigroup (C - Get Report) closed at $33.81 Friday, returning 28% year-to-date, following a 44% decline during 2011. The shares trade for 0.7 times tangible book value, and for 7.5 times the consensus 2013 EPS estimate of $4.53. The consensus 2012 EPS estimate is $4.09. Citi's ROA over the 12-month period ended June 30 was 0.55%, and its ROE was 5.78%. The company continues to follow CEO Vikram Pandit's long-term strategy of winding down the noncore assets placed within Citi Holdings, and investors hope eventually to be rewarded through a major return of capital, as the balance sheet continues to shrink and the company reverses some or all of its deferred tax valuation allowance. Citi is rated a B-minus (Good) by TheStreet ratings.
- Shares of Wells Fargo (WFC) closed at $35.30 Friday, returning 29% year-to-date, following a 10% decline during 2011. The shares trade for two times tangible book value, according to Thomson Reuters Bank Insight, and for 10 times the consensus 2013 earnings estimate of $3.66 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $3.31. The company's ROA for the 12-month period ended June 30 was a relatively strong 1.30%, while its ROE was 11.57%. The stock is rated a B+ (Good) by TheStreet Ratings.
The following are the six actively traded banking names with average daily trading volume of over 50,000 shares, there are six stocks rated "A" or A+" by TheStreet ratings:
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