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.

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Comments (2)
  • toomuchgas
    , contributor
    Comments (1031) | Send Message
    I guess KEY has been going up but it seems like dead money vs. its historical value.
    9 Oct 2013, 07:36 PM Reply Like
  • 320399
    , contributor
    Comments (158) | Send Message
    Key bank is a solid pick at these levels....


    From buybacks, dividend increases and a solid management team- this stock should be in the mid to high teens by next year.
    14 Oct 2013, 08:22 AM Reply Like
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