Each one of these bank stocks is now trading below book value. Each one has a price/earnings ratio substantially lower than that of the market as a whole. Each one is making money and each one is paying dividends, some with better yields than the U.S. Treasury’s 30-year bond.
The potential drawback to buying value stocks such as these is that they may just sit there for a long time – or even decline in price. The positive potential is that such undervalued situations may be ripe for larger institutions, looking for growth and diversity, to buy them out. At higher prices.
Associated Banc-corp is New York Stock Exchange-traded with 200 banking locations in Wisconsin, Minnesota and Illinois, according to the company’s website.
The stock is available for purchase now at a 10% discount to book value. The price/earnings ratio is 10.7 at a time when the p/e of the S&P 500 is up there at 21. Associated Banc-corp pays a 3.35% dividend. Earnings are good this year and the 5-year record is positive. The bank’s long-term debt comes in at less than shareholder equity.
First Midwest Bancorp is Chicago-based and NASDAQ-traded.
The bank can be purchased here at 92% of its book value. The price/earning ratio of 11.7 is lower than most NASDAQ stocks. Investors receive a 2.84% dividend. The 5-year earnings record is positive and last year was very good. Shareholder equity is greater than long-term debt. Trading volume is relatively low at about half a million shares daily.
Janus Henderson Group is headquartered in London, the United Kingdom and trades on the New York Stock Exchange.
The stock goes for an 11% discount to its book value. The price/earnings ratio comes in at 10.7. Earnings this year have been very good and it’s the same kind of story for the 5-year record. Shareholder equity exceeds long-term debt. The dividend yield is higher than that of the other banks mentioned here: 6.39%.
Simmons First National Corporation is traded on the NASDAQ and based in Pine Bluff, Arkansas.
The financial institution trades at a 9% discount to book with a price/earnings ratio of 10.6. Earnings this year have been excellent and the 5-year track record looks very good as well. Long-term debt is less than shareholder equity. Simmons is paying a 2.7% dividend yield.
These are the kind of situations that might attract the attention of Benjamin Graham, the legendary value investor who mentored Warren Buffet long ago. I wrote on Forbes.com about identifying cheap stocks using Graham-derived methods right here.
Stats courtesy of FinViz.com.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.