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Zions Bancorporation Is Trading At 1x Tangible Book; Does That Mean It's Cheap?

On Tuesday night, Salt Lake City, Utah-based Zions Bancorporation (NASDAQ:ZION) closed at $19.61. With Q3 2012 tangible book value per share ("TBV-PS") of $20.24, that means ZION currently trades at 0.97x TBV-PS.

Some investors believe that 1x TBV-PS is a floor below which a bank shouldn't trade. Is this floor real, implying that current buyers of ZION enjoy an especially attractive risk-reward tradeoff, or is ZION's current valuation justifiable, implying that there's a risk ZION's stock price could stay where it is, or even go lower? As of mid-November, ZION's short interest percentage was 7.9%, down materially from its nosebleed high of 41% in mid-September 2008, but still well above that of many banks. The current short interest...

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