Phoenix-based Western Alliance Bancorp. was the least-expensive US bank stock by price-to-estimated 2023 earnings per share as of mid-August, while Dallas-based Triumph Financial Inc. was the most-expensive by the same measure.
Cheaply valued bank stocks
As of Aug. 16, Western Alliance logged a price-to-estimated EPS multiple of 6.0x, the lowest among the 122 banks included in this S&P Global Market Intelligence analysis. The industry median for the institutions analyzed was 9.1x.
After suffering when three regional banks failed earlier in the year, Western Alliance shares closed Aug. 16 with a price of $47.93, up 168.7% from May 4, a few days after First Republic Bank failed. The estimated 2023 normalized EPS for Western Alliance represents an 18.2% decrease from the company's 2022 normalized EPS.
On July 19, Janney Montgomery Scott analyst Timothy Coffey reiterated his "buy" rating on Western Alliance after the company reported strong deposit growth in the second quarter.
"[Western Alliance] delivered the results and forward guidance that reflected an inflection point for earnings power into [the second half of 2023]," the analyst wrote in a note. Coffey lowered the 2023 EPS estimate for the company by 73 cents to $7.43.
Wedbush Securities analyst David Chiaverini also cut his 2023 EPS estimate for Western Alliance to $6.94 from $7.34 following the company's second-quarter earnings release. The change was mainly due to lower net interest margin/net interest income assumptions, he wrote in a July 19 note.
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Other regional banks on the list include Dallas-based Comerica Inc., with a multiple of 6.1x; Pasadena, Calif.-based East West Bancorp Inc., with 6.4x; Providence, RI-based Citizens Financial Group Inc., with 6.9x; and Columbus, Ga.-based Synovus Financial Corp., with 7.2x.
Earlier this month, Moody's downgraded the ratings of 10 US banks as it sees "sources of strain" on the US banking sector, including another regional, Stamford, Conn.-based Webster Financial Corp. Webster was also among the least-expensive bank stocks with a multiple of 7.2x.
Richly valued bank stocks
Triumph Financial booked the highest price-to-estimated EPS multiple as of Aug. 16, at 40.9x.
Wilmington, NC-based Live Oak Bancshares Inc. was the second-most expensive bank stock as it traded at 22.8x its estimated EPS, followed by Abilene, Texas-based First Financial Bankshares Inc. with a multiple of 20.5x.
Negative returns
The top three least- and most-expensive bank stocks booked negative returns in the last 12 months, while the S&P 500 returned positive 4.8% and the S&P US BMI Banks index returned negative 13.5%.
Least-expensive stock Western Alliance had a negative 42.7% return, while the most-expensive stock, Triumph Financial, saw a negative 11.7% return.
In terms of year-to-date returns, Raleigh, NC-based First Citizens BancShares Inc.'s return was the highest among all the banks included in the analysis at 85.4%. Memphis, Tenn.-based First Horizon Corp.'s was the lowest at negative 46.4%.
