Wednesday, 25. April 2018  
12.12.2017 21:58
Author: Nic Wright

STOCK SCREEN: Banks With Dividend Yield And Upside-to-Fair Value For Receding Central Bank Repression And Rising Rates

 

The challenge since 2009 has been the depression economics of excess debt, over-capacity and no-inflation coupled with high regulation. But Bank stocks have been rallying to their best performance in years as the presumptive next chair of the Federal Reserve, Jerome Powell, told Congress he believes banks are already regulated enough, and signaled an interest in reducing some of what the financial services industry considers a compliance burden.

 

Meanwhile, Congress is advancing a tax overhaul that, in addition to cutting corporate taxes, would likely stoke inflation. That’s because the plan will widen the federal deficit, pushing the government to borrow more. Also economic leading indicators suggest a stronger loan growth and overall economic improvements could build the primary upside drivers for interest rates.

 

Rising government bond yields tend to boost bank profits and give financial firms an added lift ahead of the Federal Reserve’s expected interest-rate increase on Wednesday. Earnings estimates for 2018 for the financials have been raised, while those for the broader S&P 500 have been marked down. For sector earnings in 2018, growth of 15.2% is now expected, up from 13.4% in June. An increase of 10.7% is expected for earnings across the broader stock index, down from 12.1% over the summer.

 

In this context, we screen the banking sector and check the stocks for their Margin-Of-Safety according to our AVM’s Intrinsic Stock Value estimates. Screening criteria are Dividend Yield above 3 percent, PBV  below 2 and Intrinsic Value Upside according to our AVM’s fair value estimate. Here is our list of stocks 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 to analyse different growth scenarios with our MODELER forecasting tool:

CLICK COMPANY NAME FOR DETAILED STOCK VALUE ANALYSIS

COUNTRY

LAST PRICE

MARKET CAP.

PRICE / EARNINGS

PRICE / BOOK

RETURN ON EQUITY [%]

DIVIDEND YIELD [%]

 ABN AMRO GROUP NV-CVA

 Netherlands

26.79

25183

11.7

1.3

13.0

5.1

 BANCO BILBAO VIZCAYA ARGENTA

 Spain

7.24

48209

10.6

1.0

8.7

3.7

 BANCO DE SABADELL SA

 Spain

1.68

9436

10.9

0.7

5.5

3.4

 BANK OF MONTREAL

 Canada

100.90

68912

13.2

1.5

12.7

3.8

 BANKIA SA

 Spain

4.10

11802

13.2

0.9

6.2

3.1

 BNP PARIBAS

 France

64.70

80857

10.2

0.9

7.8

4.7

 CANADIAN WESTERN BANK

 Canada

37.93

3625

16.9

1.0

9.0

3.6

 JYSKE BANK-REG

 Denmark

348.70

31063

11.4

0.9

11.2

3.1

 LLOYDS BANKING GROUP PLC

 United Kingdom

67.35

48470

9.1

1.1

7.1

5.9

 MEDIOBANCA SPA

 Italy

9.61

8460

11.0

0.9

8.7

4.2

 OLD NATIONAL BANCORP

 United States

17.15

2324

16.2

1.1

8.5

3.3

 ST GALLER KANTONALBANK A-REG

 Switzerland

462.25

2576

16.8

1.2

7.2

3.2

 UBS GROUP AG-REG

 Switzerland

17.71

68193

12.5

1.2

7.7

3.7

 UMPQUA HOLDINGS CORP

 United States

20.33

4477

18.9

1.0

5.9

3.7

 VALIANT HOLDING AG-REG

 Switzerland

107.50

1698

13.9

0.8

5.7

3.7