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Alberto Abaterusso
Alberto Abaterusso
Articles (2203) 

A Trio of Fairly Priced US Regional Banks to Look At

Their Graham blended multiplier is below 22.5

January 07, 2020 | About:

Benjamin Graham, the pioneer of value investing, co-author with David Dodd of "Security Analysis" and author of "The Intelligent Investor," suggested looking for stocks whose price-earnings ratio multiplied by their price-book ratio gives a result of less than 22.5, as these stocks are more likely to be trading below their intrinsic value.

The following U.S. regional bank stocks have a Graham blended multiplier of less than 22.5 and have been assigned positive ratings in the hold to buy range from sell-side analysts on Wall Street.

First US Bancshares Inc.

First US Bancshares Inc (NASDAQ:FUSB) is a Birmingham, Alabama-based holding of a regional bank traded at a price of $11.77 per unit at close on Jan. 6 for a market capitalization of $73.22 million.

The stock has a Graham blended multiplier of 14.42, as the price-earnings ratio is 16.58 and the price-book ratio is 0.87. The banks industry has a median of 12.07 for the price-earnings ratio and of 1.06 for the price-book ratio.

In the past year through Jan. 6, the share price has increased by 47% to above the 200-, 100- and 50-day simple moving average lines.

The 52-week share price range is $7.60 to $11.99.

The dividend yield is 0.76% versus the industry median of 2.97% as of Jan. 6. The company is currently paying a cash quarterly dividend of 3 cents per common share. First US Bancshares has been paying dividends for approximately 17 years.

Wall Street issued a hold recommendation rating and has set an average target share price of $32.00, reflecting a 172% upside.

American River

The second company that meets the above-listed criteria is American River Bankshares (NASDAQ:AMRB). Shares of the Rancho Cordova, California-based holding of a regional bank closed at $14.87 on Jan. 6 for a market capitalization of $87.74 million.

The stock has a Graham blended multiplier of 17.91, as the price-earnings ratio is 16.9 and the price-book ratio is 1.06. The industry has a median of 12.07 for the price-earnings ratio and of 1.06 for the price-book ratio.

In the past year through Jan. 6, the share price has risen 6% to place slightly above the 50-day and substantially above the 200- and 100-day simple moving average lines.

The 52-week range is $11.66 to $15.99.

The dividend yield is 1.61% versus the industry median of 2.97% as of Jan. 6. Currently, the company is paying a quarterly cash dividend of 7 cents per common share. The bank has been paying dividends for about 18 years.

Wall Street issued a buy recommendation rating and has set an average target share price of $17.25, reflecting a 16% growth from Mondays closing price.

Western New England Bancorp

The third company that displays the screening criteria is Western New England Bancorp Inc. (NASDAQ:WNEB). Shares of The Westfield city, Massachusetts-based holding of a regional bank were trading at a price of $9.47 per unit at close on Monday for a market capitalization of $251.54 million.

The stock has a Graham blended multiplier of 20.06, as the price-earnings ratio is 18.57 and the price-book ratio is 1.08. industry has a median of 12.07 for the price-earnings ratio and a median of 1.06 for the price-book ratio.

In the past year through Jan. 6, the share price has fallen 6% to trade below 100- and 50-day simple moving average lines, even though it is still slightly above the 200-day SMA line.

The 52-week range is $8.50 to $10.19.

The dividend yield is 2.11% versus the industry median of 2.97% as of Jan. 6. The company is currently paying a quarterly cash dividend of 5 cents per common share. This stock has been paying dividends for 18 years.

Wall Street issued an overweight recommendation rating for shares of Western New England Bancorp Inc. and has established an average target share price of $10.25, mirroring an 8.2% upside.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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