Here's a quick look at the lower forward price-to-earnings valuations for four big banks that beat KeyCorp's first-quarter return on average assets (ROA) of 0.99:
- Wells Fargo's (WFC) first-quarter ROA was 1.41% and its return on average tangible common equity, or ROTCE, was 17.76%. The shares closed at $40.55 Friday, trading for 10.4 times the consensus 2014 EPS estimate of $3.90.
- U.S. Bancorp (USB) of Minneapolis achieved a first-quarter ROA was 1.65% and its ROTCE was a very strong 23.79%. The company has been the best earnings performer among the 24 components of the KBW Bank Index through and after the credit crisis. The shares closed at $35.06 Friday, trading for 10.8 times the consensus 2014 EPS estimate of $3.24.
- For BB&T (BBT) of Winston-Salem, N.C., the first-quarter ROA was 1.11% and the ROTCE was 8.25%. The shares closed at $32.92 Friday, trading for 10.6 times the consensus 2014 EPS estimate of $3.10.
- Fifth Third Bancorp (FITB) of Cincinnati had a first-quarter ROA of 1.34% and ROTCE of 15.23%. The shares closed at $18.20 Friday, trading for 10.5 times the consensus 2014 EPS estimate of $1.73. Applying the multiple of 12.9 to KBW's 2014 EPS estimate of $1.77 would lead to a price target of $23, for upside potential of 31%.