These bank stocks are trading at discounts of up to 54%, and Wall Street likes them.

Marinac and his team follow more than 350 American banks listed on the stock exchange, specializing in community and regional players. The research group was previously FIG Partners, which was acquired by Janney in September.

On May 19, Marinac said in a report that 57% of the banks monitored by its team of analysts were operating below tangible book value. He listed 11 that his team called “purchase”. (The tangible book value of a bank is the book value of its common shares, less intangible assets, such as lending rights, goodwill, and deferred tax assets.)

Here is Janney’s list, sorted by ticker:

The figures in the table are as of May 19 closing, calculated by FactSet, with the exception of Janney’s estimated distribution rates (cash dividends per common share divided by earnings per share) for the next four quarters.

You will have to scroll down to see all the data.

The list shows attractive dividend yields, and it is natural to worry about dividend cuts during the economic downturn fueled by an unprecedented pandemic. Marinac expects 80% of the banks covered by his team to maintain their dividends.

Deeper dive

Among the 11 sectors of the S&P 500 index
SPX
+ 1.66%,
The financial services sector was the second worst performance of this year, with a drop of 30% (energy was the weakest of the sectors, 38% less).

It is not surprising to see banks lagging behind in the recovery that started after the benchmark reached its lowest level of the year on March 23. The American economy United States It went from wealth to poverty, with a massive increase in unemployment when the blockades began in March. Banks’ financial results are slow to reflect an expected wave of credit losses and, with loan tolerance agreements (deferred payments), we are unlikely to see an increase in distressed loans until the third quarter, and some analysts believe this lending problem peaks in the first quarter of 2021.

Investors who have long memories of the 2008/2009 financial crisis, bank bailouts and bank failures are now afraid of bank stocks. But Marinac wrote that “the fear and the irrationality of the investors neglect the way in which the banks operate today with a leverage of 25% in 2020 compared to 2009.”

He added that, in addition to higher capital levels, banks had the advantage of having a much lower loan-to-value ratio for commercial mortgages than in 2008.

Investors know this is the reality of credit today, but they have lost their common sense. I’ve seen it before: it’s the fourth financial crisis in my career, “added Marinac.

So, while the coronavirus pandemic is making this crisis different from the 2008/2009 banking crisis, Marinac believes that the higher capital levels brought about by the 2010 regulatory reform, coupled with tighter credit standards, will allow Most banks are resisting the storm.

The following is a much broader list of banks operating below tangible book value, as well as consensus price targets among analysts interviewed by FactSet.

Starting with the Russell 3000 Index (which includes the 3,000 largest stocks traded in the United States), 48 banking companies with a market capitalization of at least $ 1 billion traded below the book value tangible to fence. May 19, according to FactSet. The list includes all of the Janney purchase qualification groups mentioned above. This table has been sorted by percentage of “purchase” ratings among the analysts interviewed by FactSet:

It is a very large table, and you will have to scroll down to see most of the data.

An action list will only include a small amount of information. It is very important to do your own research before making any investment and to consider how well a business can operate at least over the next decade.