Zions Bankcorp: Cheap Stock, But Not Buying Here

I found this company while running screens for cheap stocks. Zions stock does look cheap: The P/E ratio is 15.9, the P/B ratio is 1.9 , and the stock appears to be selling at a significant discount to its intrinsic value.

ZION operates over 500 banking offices through seven subidiairies in ten Western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, Texas, and Washington, and also engages in money management, insurance sales and other financial businesses through ten other subsidiaries. The firm has a market capitalization of 9.1B.

Zions has outperformed the S&P, but with less volatility. But the current dividend yield is only 1.82%. However, the dividend does show an excellent 5-year growth rate and the payout ratio is only 27%. A glance at the balance sheet shows a current ratio of 1.11, within the range of many banks.

But it is proving difficult to obtain enough information to assess this company’s financial strength in any detail, and the current ratio by itself certainly does nothing to inspire confidence. Earnings and the rate of earnings growth have been quite good. However, company insiders have been selling more stock than they have been buying, and ZION has a surprisingly high .94 3-year correlation with the energy sector.

ZION is no doubt a fine company, but I see too many things I don’t like.

ZION 1-yr. chart:

Related Articles: Zions Bancorporation: Will ESOARs Fly?; ESOARS: High Flyer or Donkey Flop? We'll Find out Soon Enough (ZION)