In this article, we will discuss the 10 most undervalued bank stocks to invest in according to analysts.
The Banking Industry’s Outlook Under the Trump Admin
Amidst the enthusiasm of the new President Donald Trump for digital assets, it is important to know that US banks have avoided allowing customers to use crypto for retail transactions. Regarding the banking industry’s approach to digital currencies, the CEO of Bank of America, Brian Moynihan, told CNBC that if the regulators allow, the American banking industry would jump into crypto payments. Speaking on this stance, Moynihan stated:
“If you go down the street here and you go in and buy lunch, right, if you can pay with Visa, Mastercard, a debit card, Apple Pay, etc., this would just be another form of payment”
At the same time, Trump’s lighter regulatory approach is expected to reduce some of the burden on the banking industry imposed by Biden’s administration and is likely to spur dealmaking. Barclays senior equity analyst Jason Goldberg told Yahoo Finance that the environment is a ‘pro-growth, less regulation backdrop’ and favorable for increased loan growth and enhanced capital market activity among banks.
JPMorgan’s Mary Erdoes expressed optimism for deals in the banking industry under the new admin, saying:
“Companies don’t want to go public or can’t go public because of the heavy regulatory burden and hopefully you’ll see that [change]”
With increased mergers and acquisitions being anticipated in the United States under the new administration, CNBC mentioned European banking leaders hoping for more deal-making activity on the continent. The chief executive of the largest bank in the Netherlands, ING, is of the opinion that too many banks in Europe deem the sector inefficient. In comparison to the US, fragmented laws across Europe tend to prevent a more efficient banking system. Simultaneously, the chief executive of Swiss bank UBS, Sergio Ermotti, thinks the policy stance taken by regulators under Trump would encourage deal-making among several small and regional banks while he considers the US authorities unlikely to weaken regulations for larger banks.
With that being said, let’s move to the 10 most undervalued bank stocks to invest in according to analysts.
Our Methodology:
In order to compile a list of the 10 most undervalued bank stocks to invest in according to analysts, we first used a stock screener to shortlist bank stocks that are trading at a forward P/E of less than 15 and that analysts see at least 15% upside to. The 10 most undervalued bank stocks to invest in according to analysts have been arranged in ascending order of their average upside potential.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Most Undervalued Bank Stocks To Invest In According To Analysts
10. East West Bancorp, Inc. (NASDAQ:EWBC)
Average Upside Potential: 18.06%
Forward P/E: 11.93
East West Bancorp, Inc. (NASDAQ:EWBC) is the parent company of East West Bank. East West Bank started operating in 1973 as a federally chartered savings institution catering to the immigrant Chinese-American community and has evolved into a full-service commercial bank serving the US and China markets over the years.
East West is a leading regional bank and falls among some of the only US banks with a full banking license in China, alongside an extensive cross-border banking experience. East West Bank holds the privilege of being the largest independent bank headquartered in Southern California. It has 98 US branches in leading metropolitan markets as well as 4 branches in Asia to support cross-border business.
Other than having decades of cross-border expertise and serving an attractive market niche with high-growth demographics, a comparison with peers shows that East West has demonstrated strong profitability while outperforming peers on credit over the past decade. East West remains well positioned for growth trends, with a slowing Chinese economy still 1.5x faster than the U.S., supporting cross-border business.
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