McEvoy's price target for KeyCorp is $13, "which equates to 13x our 2014 EPS estimate [matching the consensus EPS estimate of $1.00] and 1.3x tangible book value," he wrote.
"Based on our and consensus estimates, a peer group of regional banks currently trades at 13x 2014E EPS and 1.7x tangible book value," McEvoy wrote, adding "We believe KEY should trade at a slight discount to its peers on a P/TBV basis given the higher capital levels."
Shares of FirstMerit of Akron, Ohio, closed at $21.62 Tuesday, returning a whopping 56% this year. The shares trade for 13.9 times the consensus 2014 EPS estimate of $1.56. The consensus 2013 EPS estimate is $1.26.
The company will announce its third-quarter results on Oct. 22, with a consensus earnings estimate of $56.5 million, or 34 cents a share, increasing from 29 cents the previous quarter, but matching the EPS a year earlier.FirstMerit is clearly a growth play. While the stock's valuation to the consensus 2014 EPS estimate is significantly higher than the forward P/E ratios for BB&T and KeyCorp, the valuation appears low when considering the company's 12% organic loan growth rate over the past year. Please see TheStreet's recent coverage of FirstMerit's growth strategy, which includes making large acquisitions "without giving away the store," according to JPMorgan analyst Steven Alexopoulos. McEvoy's price target for FirstMerit is $24, "which equates to 14x our 2014 EPS estimate [of $1.70], with a peer group of regional banks (assets $12B-$50B) trading at 15x OPCO and consensus EPS estimates," he wrote.
Signature BankShares of Signature Bank closed at $90.77 Tuesday, returning 27% this year. The shares trade for 18.0 times the consensus 2014 EPS estimate of $5.05. The consensus 2013 EPS estimate is $4.50. Analysts expect the bank to post third-quarter net income of $55.6 million, or $1.16 a share, increasing from $1.08 in the second quarter and 91 cents in the third quarter of 2012. Signature Bank is one of the fastest growing U.S. banks, with net loans and leases up 13% year-over-year through the second quarter. The company has been quickly expanding its national equipment leasing business.
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