Banking on bargains—are lenders cheap yet?
Banking on bargains—are lenders cheap yet?
Recent financial market turmoil has pushed banks' share prices down. No doubt a lot of it is justifiable. But, amongst the rubble, investors should be able to find some bargains.
It's been a shocking month for banks. A few weeks ago, analysts were sure the economy was powering full steam ahead. Now they're worried the fallout from Silicon Valley Bank's demise will cause a deep recession. It's not only an American problem, however. Over in Europe, Swiss authorities sold Credit Suisse, one of the country's oldest institutions, to UBS, another big lender. Unsurprisingly, bank stocks have fallen amongst the carnage.
The KBW index, a tracker of American bank stocks, has fallen 27% over the last three weeks. That raises the question: are bank stocks cheap yet? My research suggests that regional American banks are inexpensive if the current batch of problems doesn't kill them. But large banks will have to fall further before they become interesting.