This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Financial Services Stocks Still Look Very Undervalued

James Dennin, Kapitall: We looked for undervalued financial services stocks. It wasn't hard. 

​Though the financial crisis is almost 6 years old and financial markets have since had some of their best years ever – Americans still have not forgiven the big banks. 

That's according to a study sponsored by a coalition of credit unions and community banks to measure consumer sentiment about the financial services sector. Their results, while not exactly surprising, still paint a picture of Americans who are livid at the big banks and still intent on punishing them.

When asked, two-thirds of Americans remain angry at our financial sector about the improprieties of the financial crisis. And one-half still refuse to patronize big banks altogether, citing "guilt" and the improvement to local economies as reason they prefer community banks. 

But there are still many arenas where big banks hold several advantages. They are more likely to have access to the latest technology, and they have more leverage on foreign markets. They can pull more weight with lawmakers. And, though no one really ended up going to jail, a lot of reforms to the financial system were finally pushed though. 

For instance, even before the re-implementation of the Volcker rule, which proscribes banks from making risky trades with publicly underwritten money, banks had already started selling off their riskier assets. 

The verdict is still out on whether it's really time to forgive the big banks. But one thing which isn't up for debate is whether the market has forgiven them.

It hasn't.

We decided to run a screen to see which of the 14 large, diversified financial institutions are the most undervalued. 4 of them were trading at least 15% below their Graham Number.

The Graham Number is a ratio that takes into account a company's price, price-to-equity ratio, earnings, and book-value to try and describe a so-called "fair price" for the company. While only a partial view into what a company's stock price should be, it does provide a pretty good picture of just how much a company might be undervalued based on these 4 important metrics.

1 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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,822.63 +109.97 0.62%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs