This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Discover Tops List of Cheapest Banks With Greatest Returns

Not only is Discover the cheapest stock to forward earnings among the group of 11 we identified, the company has been the strongest earnings performer by far, with ROTCE ranging from 14.79% to 19.05% over the past five quarters.

KBW analyst Sanjay Sakhrani in a phone interview on Tuesday said some investors were frustrated at Discover's relatively low valuation and discussed the possibility of the company unlocking value by selling its payment processing network.

Sakhrani rates Discover "outperform," with a $61 price target.

Here are the next five cheapest stocks among 11 actively traded U.S. bank holding companies achieving ROTCE of over 15% over each of the past five quarters, by descending forward P/E ratio:

Shares of Taylor Capital Group (TAYC) of Rosemont Ill., closed at $23.01 Tuesday, returning 27% this year. The shares trade for 15.1 times the consensus 2014 EPS estimate of $1.52. The company's ROTCE has ranged from 15.49% to 24.13% over the past five quarters. Taylor Capital has a deal in place to be acquired by MB Financial (MBFI) of Chicago, which is expected to be completed by the end of the year. For each share, Taylor Capital shareholders will receive 0.64318 shares of MBFI common stock and $4.08 in cash. That comes to a slight premium of $23.19 a share, based on MBFI's closing price of $29.71 on Tuesday.

Next is State Street (STT) of Boston, with shares closing at $70.80 Tuesday, for a year-to-date return of 52%. The shares trade for 13.6 times the consensus 2014 EPS estimate of $5.19. The company's ROTCE has ranged from 15.45% to 21.92% over the past five quarters. Please see TheStreet's earnings coverage for a discussion of the company's third-quarter results.

M&T Bank (MTB) of Buffalo has seen its stock return 15% this year through Tuesday's close at $111.43. The shares trade for 13.1 times the consensus 2014 EPS estimate of $8.49. The bank is a strong performer, with ROTCE ranging from 18.03% to 22.39% over the past five quarters.

M&T in August 2012 agreed to acquire Hudson City Bancorp of Paramus, N.J, in a deal originally valued at about $3.7 billion in cash and stock. The merger was expected to be completed during the second quarter, but the two companies in April announced that the time needed to gain regulatory approval of the deal would be "extended substantially," because M&T had "learned that the Federal Reserve has identified certain regulatory concerns with M&T's procedures, systems and processes relating to M&T's Bank Secrecy Act and anti-money-laundering compliance program."
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DFS $56.76 -0.16%
WFC $55.10 -0.52%
AAPL $118.30 0.42%
FB $104.24 -1.15%
GOOG $742.60 -1.02%


Chart of I:DJI
DOW 17,719.92 -78.57 -0.44%
S&P 500 2,080.41 -9.70 -0.46%
NASDAQ 5,108.6660 -18.8590 -0.37%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs