Updated with market close information, current year-to-date returns, and comments on Capital One.
NEW YORK (
Bank of America
was the loser among the largest U.S. financials on Monday, with shares pulling back over 3% to close at $7.07.
The broad indexes all showed slight declines, as investors awaited the results of a meeting between European Union in Brussels to finalize a $661 billion rescue fund, while Greece and private creditors indicated that they were close to an agreement for investors to take a large haircut on their government debt holdings, according to Bloomberg. Debt markets were jittery, with yields on Portuguese 10-year bonds spiking by more than 200 basis points, to 14.28%.
KBW Bank Index
was down over 1% to close at 42.38, with 21 out of 24 index components showing declines for the session.
Bank of America's shares are now up27% year-to-date. With the increase in the share price and a slew of downward earnings estimate revisions from analysts, the shares now trade for 10 times the consensus 2012 earnings estimate of 73 cents a share, among analysts polled by Thomson Reuters.
The shares trade for 0.6 times tangible book value, according to HighlineFI, which, of course, is a low multiple, reflecting the continued uncertainty over the company's mortgage putback risk.
KBW analyst Fred Cannon on Monday said that "year to date, the stocks that have performed the best, including Bank of America and
, have had some of the largest downward earning revisions," but that "over the year we believe that declining earning estimate revisions can turn value stocks into value traps, and continue to caution investors regarding investments in them."
Meanwhile, Wells Fargo analyst Matt Burnell said in a research report Monday that Bank of America, along with Citigroup, would have the most to gain from a deal on Greek sovereign debt, because of their low stock valuations, compared to
Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.
Capital One Financial
dipped nearly 3% to close at $44.80, after Morgan Stanley analyst Betsy Graseck lowered her 2012 earnings estimate to $5.89 from $6.10, and here 2013 EPS estimate to $6.16 from $6.28, although she also estimated that the company's operating earnings would grow 14% during 2012, with average loans growing by 45%, from the pending acquisitions of
ING Direct (USA)
U.S. credit card portfolio.
The company expects to raise between $750 million and $1.25 billion in common equity through a public offering of shares, to complete the HSBC deal in the second quarter.
Graseck maintained her "Overweight" rating on Capital One, with a $55 price target, based on the "accretion from acquisitions."
Capital One's shares have returned 6% year-to-date.
The shares trade for 1.3 times tangible book value and eight times the consensus 2012 EPS estimate of $5.81.
Interested in more on Capital One? See TheStreet Ratings' report card for this stock.
Written by Philip van Doorn in Jupiter, Fla.
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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.