Bank of America: Financial Winner

NEW YORK ( TheStreet) -- Bank of Ameria ( BAC) was the winner among the largest U.S. banking names on Tuesday, with shares rising 3% to close at $9.80.

The broad indexes pulled back on fears of a slowing Chinese economy, following a report from China's National Bureau of Statistics that "in February, 45 cities out of the statistical pool of 70 major cities saw drops in new home prices from January, while new home prices in 21 cities remained unchanged." Year-over-year, 27 of the cities saw declines in new home prices.

The U.S. Commerce Department reported Tuesday that February housing starts fell to a 698,000 annual pace from an upwardly revised 706,000 in January. However, building permits for February rose to a 717,000 rate, from 682,000 in January

The KBW Bank Index ( I:BKX) rose slightly to close at 50.17.

Bank of America's shares have now returned 77% year-to-date, following last year's 58% drop. The 12-month return is a negative 30%.

Despite the run-up, Bank of Americas shares are heavily discounted, trading for just 0.8 times the company's reported Dec. 30 tangible book value of $12.95.

For long-term investors who can look beyond a 12-month horizon, Bank of America's shares are cheaply priced to forward earnings. The shares trade for eight times the consensus 2013 EPS estimate of $1.19.

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While the company didn't request Federal Reserve approval for an increased return of capital to investors this year, the shares have risen 21.86% since the company passed the stress tests last week, as investors have been relieved that a common equity raise is off the table.

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

Shares of Citigroup ( C) rose 2.5% to close at $38.08.

The shares have now returned 45% year-to-date, following a 44% decline during 2011.

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Like Bank of America, Citigroup's shares are trading for just 0.8 times the company's reported Dec. 30 tangible book value of $49.81 per share.

Also like Bank of America, Citi trades for a just eight times the consensus 2013 earnings estimate of $4.78. The consensus 2012 EPS estimate is $3.97.

While Citigroup famously had its plan to increase its return of capital to investors during 2012 rejected last Tuesday by the Federal Reserve, the shares have risen 11.35% over the past week. The company responded by saying it would submit a new capital plan to the Fed.

Morgan Stanley analyst Betsy Graseck has a neutral rating on Citigroup and on Sunday raised her 2012 EPS estimate to $3.67 from $3.34, and her 2013 EPS estimate to $4.40 from $4.15, while raising her price target for the shares to $42 from $30.

Graseck said she expected "Citi to resubmit their capital plan in 1h12 and begin returning capital in 2h12," through a dividend increase and an estimated $1.5 billion in share buybacks during 2012.

Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

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.

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