real-time news and commentary for investors
Wednesday, Oct 9
Oppenheimer's regional bank picks into Q3 earnings
- The banking sector overall - at 12-15x 2014 EPS and 1.5-.19x book value - is "fairly valued," says Oppenheimer's Terry McEvoy, but he finds some undervalued names headed into Q3 earnings.
- Four top regional bank picks are BBT, KEY, FMER, and SBNY.
- BB&T, says McEvoy has averaged a 12.5x forward P-E multiple vs. the 10.6x it's at now.
- KeyCorp trades at just 11.3x earnings vs. its peer group at 13.
- FirstMerit has had a big run and trades at 13.9x estimates, but it's a growth play - 12% organic loan growth this year along with reasonably-priced acquisitions - and deserves this multiple, says McEvoy.
- At 18x consensus, Signature Bank is also a growth play deserving of a big multiple - net loans and leases were up 13% Y/Y in Q2.
- Relevant ETFs: KBE, KBWB, KRE.