Saturday, 19. August 2017  
30.03.2017 05:15
Author: Nic Wright

STOCK SCREEN: European Banks With Low Price/Book Value And Solid Upside To Our AVM’s Intrinsic Value

 

The European bank sector performed poorly over the last ten years as the impact of the US sub-prime crisis began to manifest itself in summer 2007. Ever lower interest rates coupled with increasing regulatory pressure has squeezed profits even at the best in class institutions. As a result European banks are trading at discount valuations compared with U.S. peers, but still European financials – banks and insurers –remain about 20% of equities market cap on average.

 

However, April might become an inflection point in the ECB’s almost uninterrupted nine-year run of ultra-expansionary monetary policy. If economists are correct, the European Central Bank will reduce monthly purchases of public and private debt from 80 to 60 billion euros ($64 billion) a month. This scheduled winding down of QE is also known as tapering.

 

As the end of ultra-expansionary monetary policy in Europe is in sight, some investors might think it is time to look outside the U.S. to maintain the same level of expected return in their portfolio.

 

In looking for ideas this week, we screen for European banks with Price/Book ratio below 1 and with significant upside based on at least one of our AVM's fair value estimate.

 

Here are the filter criteria:

1. Market capitalization above 1bn.

2. P/BV below 1

2. Above 10 percent Upside according to at least one of our AVM’s fair value estimate.

 

Here is our list of stocks matching all criteria in alphabetical order. Company names in the table below are linked to the ANALYZER, our single stock analysis tool. Intrinsic Value Model assumptions can be adapted in the MODELER, our modeling and forecasting environment:

CLICK COMPANY NAME FOR DETAILED STOCK VALUE ANALYSIS

COUNTRY

LAST PRICE

MARKET CAP.

MEAN MULTIPLE UPSIDE [%]

GRAHAM UPSIDE [%]

GREENBLATT UPSIDE [%]

PRICE / BOOK

 AAREAL BANK AG

 Germany

35,35

2116

-30,3

-4,5

50,9

0,8

 BANCA POPOL EMILIA ROMAGNA

 Italy

4,78

2303

22,1

-43,4

-100,0

0,5

 BANKIA SA

 Spain

1,06

12243

-17,0

-100,0

50,7

0,9

 COMMERZBANK AG

 Germany

8,69

10883

23,7

-100,0

-44,0

0,4

 CREDIT SUISSE GROUP AG-REG

 Switzerland

14,97

31286

23,5

-33,2

-100,0

0,7

 DEUTSCHE BANK AG-REGISTERED

 Germany

16,16

25372

12,7

-65,6

-100,0

0,5

 DEUTSCHE PFANDBRIEFBANK AG

 Germany

11,49

1544

9,9

-100,0

415,7

0,6

 EFG INTERNATIONAL AG

 Switzerland

6,03

1732

51,4

-100,0

-100,0

0,8

 LIBERBANK SA

 Spain

1,22

1110

27,1

-100,0

246,2

0,5

 NATIXIS

 France

5,68

17815

-41,3

-39,0

32,7

1,0

 SOCIETE GENERALE SA

 France

47,20

38124

-28,1

-19,9

18,6

0,7

 SPAREBANK 1 SR BANK ASA

 Norway

64,50

16496

-15,5

12,1

55,2

0,8

 STANDARD CHARTERED PLC

 United Kingdom

754,80

30780

48,1

5,8

-83,1

0,7

 VALIANT HOLDING AG-REG

 Switzerland

105,30

1663

12,5

-14,9

-32,3

0,8