The broad indexes all ended with slight gains after Alcoa (AA) kicked off earnings season after Tuesday's market close by reporting fourth-quarter net income of six cents a share on $5.9 billion in revenue. The bottom line match the consensus estimate among analysts polled by Thomson Reuters, but revenue beat the $5.6 billion estimate.
The KBW Bank Index (I:BKX) was down 1% to close at 52.89, with winners and losers roughly split.
Shares of Comerica (CMA - Get Report) of Dallas were down 1% to close at $31.60, after Oppenheimer Securities analyst Terry McEvoy on downgraded the company to a "Perform" rating from "Market Perform," saying that the recent rise in long-term rates would do nothing for the stock. McEvoy on Wednesday also upgraded KeyCorp (KEY - Get Report) to "Outperform" from "Perform," with a price target of $11.00, citing the company's improved geographic strategy. KeyCorp's Shares also pulled back 1% to close at $8.90.Both of these ratings actions are discussed in more detail in TheStreet's earnings preview for regional banks, as is the Wednesday announcement by PNC Financial Services Group (PNC - Get Report) of several one-time items that will lower third-quarter earnings by 47 cents a share. PNC's shares declined slightly to close at $60.17.
Bank of America's Downgrade
Bank of America's shares have now declined by 2% during 2013. The shares rose 110% during 2012, after dropping 58% during 2011. The shares trade for 0.9 times their reported Sept. 30 tangible book value of $13.48, and for 11.8 times the consensus 2013 earnings estimate of 97 cents, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $1.27. Bank of America's forward price-to-earnings ratio is rather high when compared to the rest of the "big four" banking club, and even looks high when compared to the high-flying U.S. Bancorp (USB - Get Report), which was trading for just 10.8 times the consensus 2013 EPS estimate of $3.08 when the shares closed at $33.27 on Wednesday. And none of the big four have come close to matching USB's stellar return on average tangible common equity of 21.60%, according to data supplied by Thomson Reuters Bank Insight.