Western Alliance keeps leading least expensive US bank stocks as of mid-October

Western Alliance Bancorp. continued to be the least expensive US bank stock by price-to-estimated 2024 earnings per share as of mid-October, while Dallas-based Triumph Financial Inc. kept leading the most expensive stocks.

S&P Global Market Intelligence analyzed the price-to-estimated earnings multiples for US banks. To be included in this analysis, a company needs to have at least four analyst normalized EPS estimates available for calendar year 2024. In addition, the bottom 20% of banks by price to tangible book were excluded.

Cheaply valued bank stocks

As of Oct. 13, Phoenix-based Western Alliance booked a price-to-estimated EPS multiple of 5.5x, the lowest among the 126 banks included in this S&P Global Market Intelligence analysis. The industry median for the institutions analyzed was 8.8x.

Little Rock, Ark.-based Bank OZK ranked second with a multiple of 6.1x, followed by Sandusky, Ohio-based Civista Bancshares Inc. with 6.2x.

Columbia Banking System Inc. was part of the list as it booked a multiple of 6.4x. Earlier this month, UBS analyst Brody Preston upgraded his advisory on the Tacoma, Wash.-based company to "neutral" from "sell" after adjusting core earnings calculations.

East West Bancorp Inc.'s multiple was also 6.4x. On Oct. 3, Janney Montgomery Scott analyst Timothy Coffey started coverage on the Pasadena, Calif.-based company with a rating of "buy," a fair value estimate of the stock of $68, and an EPS estimate of $8.06 for 2024.

"[East West] is a highly diversified lender that we expect to benefit from both recent bank failures in California and strong demographic trends from the Chinese diaspora," the analyst wrote in a note.

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Dallas-based Comerica Inc. posted a multiple of 6.9x. Raymond James analyst Michael Rose downgraded Comerica to "outperform" from "strong buy," lowered its price target to $53 from $57 and dropped its 2024 EPS estimate to $5.75 from $6.

The rating and EPS estimate changes "reflect mid-quarter updates provided at a recent investor conference that point to a more challenged short- to intermediate-term outlook than previously contemplated," Rose wrote in a note.

Richly valued bank stocks

Triumph Financial's price-to-estimated EPS multiple of 26.1x represented the highest among the banks included in the analysis. The estimated 2024 normalized EPS for Triumph represents a 46.5% increase from the estimated 2023 normalized EPS for the Dallas-based company.

Earlier in October, Piper Sandler analyst Frank Schiraldi assumed coverage of Triumph with a "neutral" rating, a 12-month price target of $60 and a $2.28 EPS estimate for 2024.

"Given the unique business lines and evolving story over time, valuation of [Triumph] is complicated, and in large part should reflect one's viewpoint on the opportunity TriumphPay presents, leading to a fairly large range of potential reasonable price points," Schiraldi wrote in a note.

Dallas-based Hilltop Holdings Inc. took the second spot among the richly valued bank stocks with a multiple of 18.9x. Kalispell, Mont.-based Glacier Bancorp Inc. was third with 17.0x.

Returns

In the last 12 months, the top three least expensive bank stocks booked negative returns, and two of the top three most expensive stocks logged positive returns. By comparison, the S&P 500 returned positive 19.9%, and the S&P US BMI Banks index returned negative 8.3%.

Western Alliance, the most cheaply valued stock, had a negative 30.1% return, while Triumph Financial, the most richly valued stock, had a positive 7.8% return.