Community Bank Stocks Are Overvalued, Overbought
NEW YORK ( TheStreet) -- Earnings season for community banks is essentially over, and the FDIC-insured publicly traded institutions I have been profiling had mixed results at best. Only 5 of the 23 banks in my buy-and-trade universe of community banks beat their earnings estimates, nine matched expectations and nine missed their EPS projections.
Of the 23 community banks, three have been downgraded to hold from buy, leaving us with eight buy rated stocks and 15 hold rated stocks.
My benchmark for community banks is the America's Community Bankers Index (ABAQ), which represents 389 publicly-traded community banks.
The weekly chart for ABAQ (181.59) is positive but overbought with the five-week modified moving average at 176.22 and the 200-week simple moving average at 155.43. ABAQ is below its April 2010 high at 184.90. My quarterly value level is 158.71 with a monthly pivot at 181.63 and weekly risky level at 188.42.Chart Courtesy of Thomson/Reuters The finance sector is 17.0% overvalued with the banks-northeast industry 26.7% overvalued, the banks-southeast industry 12.7% overvalued, the banks-midwest industry 3.7% overvalued, the banks-west industry 3.9% overvalued and the finance savings and loan industry 28.5% overvalued. On Dec. 5, I wrote,
I am in Fort Lauderdale, Fla., today and tomorrow for the Information Management Network's tird annual Florida Bank & Financial Institutions Special Asset Executive Conference on Real Estate Workouts. I will be a panelist Tuesday morning explaining why I think that "The Great Credit Crunch Continues in 2013." My focus is the FDIC Quarterly Banking Profile. Send me an email if you'd like a copy of my Power Point Presentation.
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