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Fears of a collapse of the financial system due to the bank failure last month are increasing. Investors are selling off bank stocks despite assurances from financial regulators. But this offers contrarian traders an opportunity to buy M&T Bank (MTB), Webster Financial (WBS), New York Community Bancorp (NYCB) and Pinnacle Financial Partners (PNFP) amid lingering recession fears. To do. read more.
The failures of Silicon Valley Bank and Signature Bank last month left investors uneasy. Concerns related to the stability of the financial system sent prices of several bank stocks plummeting. However, the current fears surrounding the financial system provide an opportunity for contrarian traders to place bets against general market trends.
With a recession looming, I think contrarian traders may buy bank stocks that have crashed M&T Bank Corporation (Mountain bike), Webster Financial Corporation (WBS), New York Community Bancorp (NYCB), Pinnacle Financial Partners Inc. (PNFP).
Let me explain why these contrarian bets on banks can help generate profits during recessions.
The sudden collapse of two major banks has caused turmoil in global financial markets. These failures were the largest US bank failures since 2008. According to the Federal Deposit Insurance Corporation (FDIC), the SVB and signatories will: Total assets were $319 billion.
Fear of the collapse of the financial system was evident among investors. However, financial regulators stepped in to protect depositors at both banks and later launched separate lending schemes. Officials acknowledged that these measures were necessary to prevent failures from impacting the banking system and threatening other midsize banks.
After the collapse, the Fed is considering tougher rules for midsize banks. Central banks are reviewing bank capital and liquidity requirements. Further rate hikes by the Fed this year, along with possible tougher lending standards, could slow credit growth. This could send the economy into recession.
But while investors remain skeptical of the health of the banking sector, taking a contrarian approach could yield solid returns. For that, it might be wise to buy a MTB, WBS, NYCB or PNFP.
Let’s discuss these stocks in detail.
M&T Bank Ltd. (Mountain bike)
MTB is a bank holding company. The company’s banking subsidiaries include Manufacturers and Traders Trust Company and Wilmington Trust, NA. It offers retail and commercial banking and more. Its segments include business banking, commercial banking, commercial real estate, discretionary portfolios, residential mortgage banking and retail banking.
MTB’s 26% last 12-month net profit margin is 2.6% lower than the industry average of 26.69%. Its 12-month return on common equity of 9.59% is 14 percentage points lower than the industry average of 11.15%. Similarly, its 0.99% 12-month return on total assets is 13.9% lower than the industry average of 1.15%.
MTB net interest income increased 52.2% year-over-year to $5.82 billion for the year ended December 31, 2022. Net income was $1.99 billion, up 7.2% from last year.
Meanwhile, EPS was $11.53, down 16.4% year over year. Average return on assets was 1.05% for him, compared to 1.22% for the same period last year.Also, the total bad assets $2.48 billion, up 19% year-over-year.
Analysts expect MTB EPS to grow 51.5% year over year to $4.14 for the quarter ending March 31, 2023. Revenue for fiscal 2024 is expected to decline 1.4% year over year to $9.34 billion. Over the past six months, the stock has fallen 37.5% and closed its last trading session at $117.18.
of MTB POWR rating It reflects this weak outlook. The overall rating is D, which is equivalent to selling in our own rating system. The POWR Rating is calculated by considering 118 different factors, with each factor being optimally weighted.
Emotion and quality grade is D. Ranked 7th out of 10 F-rated brands money center bank group. click here To see MTB’s other ratings for growth, value, momentum and stability.
Webster Financial Corporation (WBS)
WBS is a bank and financial holding company. Its subsidiaries, Webster Bank, the National Association, and its HSA Bank division (HSA Bank) provide a variety of banking, investment and financial services to individuals, families and businesses. Its segments include Commercial Banking, HSA Bank and Retail Banking.
WBS’ return on assets over the last 12 months of 0.90% is 21.6% lower than the industry average of 1.15%. Similarly, the 12-month capex/sales of 1.31% is 28.9% lower than the industry average of 1.84%.
For the fourth quarter ended December 31, 2022, WBS net interest income after allowance for doubtful accounts and lease losses increased 131.4% year-over-year to $559.38 million. Net income was $244.75 million, up 120.4% year-on-year. EPS was $1.38, up 15% year over year.
Meanwhile, total noninterest expenses increased 83.5% year-over-year to $348.39 million. WBS’s bad assets rose 83.1% year-on-year to his $206.14 million. The company’s return on average common equity was 12.54%, compared with 13.35% in the same period last year.
Over the past year, WBS has fallen 31.1% to close its last trading session at $37.56.
The WBS POWR Rating reflects its tough fundamentals. The overall rating is D, which is equivalent to selling in our own rating system.
It has a D grade for stability, sentiment, and quality. Ranked 46 out of 66 F rated stocks Tohoku Regional Bank industry. For other WBS assessments on Growth, Value and Momentum, see click here.
New York Community Bancorp (NYCB)
NYCB operates as a bank holding company of Flagstar Bank, NA, a provider of banking products and services. The Company’s deposit products include interest-bearing checks and money market, savings, interest-free, retirement accounts, and certificates of deposit. Loan products include commercial real estate loans, multifamily loans and others.
NYCB’s trailing 12-month return on common equity of 8.20% is 26.5% lower than the industry average of 11.15%. Likewise, its 0.22% Last 12 Months Capex/Sales is 88% lower than the industry average of 1.84%.
For the fourth quarter ended December 31, 2022, NYCB’s total revenue was $577 million, up 70.7% year-over-year. In addition, net income available to common shareholders increased 15.5% year-over-year to $164 million.
Meanwhile, adjusted EPS was $0.25, down 19.4% year over year. The company’s net interest income after deducting loan loss reserves was his $255 million, down 19.8% year-over-year. Additionally, the non-GAAP return on average assets was 0.84%, compared with 1.11% in the prior-year period.
NYCB’s EPS is expected to decline 31.8% year-over-year to $0.22 for the quarter ending March 31, 2023. Revenue for the quarter is expected to be $623.85 million, up 80.3% year-over-year. Over the past year, the stock has fallen 17.2% and closed its last trading session at $8.79.
NYCB has an overall D rating, which is equivalent to a sell on its own rating system.
It has a D grade for stability and quality. Ranked 62nd in the same industry. To see other ratings for Growth, Value, Momentum, and Sentiment, click click here.
Pinnacle Financial Partners Co., Ltd. (PNFP)
PNFP is a financial holding company operated through its wholly owned subsidiary, Pinnacle Bank. We offer a full range of financing products including commercial, real estate and consumer loans to individuals, businesses and professional institutions. We also offer core deposits such as savings accounts, interest-free checks, interest-bearing checks, money markets, and certificate of deposit accounts.
PNFP’s trailing 12-month return on common equity of 10.50% is 5.9 percentage points lower than the industry average of 11.15%.
For the fourth quarter ended December 31, 2022, PNFP’s total revenue increased 18.3% year-over-year to $401.78 million. The company’s net interest income increased 33.8% year-over-year to $319.46 million. Non-interest income decreased 18.3% year-over-year to $82.32 million.
Return on average assets was 1.29%, compared to 1.39% in the prior year period. Additionally, net income available to common stockholders fell 7.5% quarter-over-quarter to $134.05 million.
Analysts expect PNFP’s EPS to fall 3.8% year-over-year to $1.79 for the quarter ending June 30, 2023. Revenue for the quarter ending March 31, 2023 is expected to increase 23.3% year-over-year to $422.88 million. Over the past year, the stock has fallen 42.5% and closed its last trading session at $52.61.
PNFP’s weak outlook is reflected in its POWR rating. The stock has an overall rating of D, which is equivalent to sell in our proprietary rating system.
Emotion and quality grade is D. Within specified range Southeast Regional Bank It ranks 20th out of 28 stocks in the industry. click here To review PNFP’s additional ratings for growth, value, momentum, and stability.
Consider this before making your next trade…
We are still in the middle of a bear market.
Yes, some special stocks can go up, as discussed in this article. However, most will fall as the bear market claws lower than ever this year.
So you need to discover “”.Revision: 2023 Stock Market Outlook‘ was just created by 40-year investment veteran Steve Reitmeister. So he explains:
- Start now with the 5 Warning Signs of a Bear Return!
- Banking crisis worries another nail in the coffin
- How far will stock prices fall?
- 7 timely trades to profit on the way down
- Plans to bottom out for the next bull market
- 2 Trades with over 100% upside potential when new bulls appear
- etc!
Watch this timely presentation before making your next trade.
Revision: Stock Market Outlook 2023 >
MTB shares fell $0.39 (-0.33%) in premarket trading on Wednesday. Year-to-date, MTB is down -18.79%, while the benchmark S&P 500 index is up 7.16% over the same period.
About the author: Dipanjan Benture
Dipanjan has been interested in the stock market since elementary school. This earned him a master’s degree in Finance and Accounting. Today, Dipanjan works as an investment analyst and financial journalist with a keen interest in reading and analyzing emerging trends in financial markets.
post 4 Bank Stocks Contrarian Traders Should Buy During a Recession first appeared StockNews.com