|Written by GSCR Staff|
|Wednesday, 16 March 2016 07:06|
We had a little more excitement yesterday in the presidential primaries as Ohio Governor John Kasich won his home state over Donald Trump. This was a must win for Kasich. It will remain to be seen if the victory can propel him in any way and stop the Trump train. March Madness also began with the four play-in games, also in Ohio. In Monday’s Goldman Guide we featured the West Coast regional bank stock BANC. Today for the Market Monitor we will keep the Ohio theme with another regional bank headquartered in Cleveland, coincidentally home of the GOP convention this summer.
The one year chart for KeyCorp (NYSE – KEY - $11.17) is illustrated below.
The stock is now approaching the technical metric of the 50-day EMA of 11.33 as of yesterday and appears to be mounting an accumulation run coming off 52-week lows in early February.
KeyCorp offers traditional bank products and also has significant investment banking arm as well. The Company’s Key Community Bank segment offers deposit and investment products; personal finance services and loans, including residential mortgages, home equity, credit cards, and various installment loans for individuals; deposits, investment and credit products, and business advisory services to small businesses; and financial, estate and retirement planning, and asset management services to high-net-worth clients. This segment also provides commercial lending, cash management, equipment leasing, investment and employee benefit programs, succession planning, access to capital markets, derivatives, and foreign exchange services to mid-sized businesses. Its Key Corporate Bank segment offers a suite of banking and capital market products, such as syndicated finance, debt and equity capital market products, commercial payments, equipment finance, commercial mortgage banking, derivatives, foreign exchange, financial advisory, and public finance, as well as commercial mortgage loans for middle market clients comprising consumer, energy, healthcare, industrial, public, real estate, and technology sectors.
First off, projected growth from consensus analyst is 15% for revenue and 20% for EPS over 2015 on average for 2016 and 2017. These projections have the stock trading at 8.2x for the forward P/E versus 10.6x trailing P/E. The Price/Book ratio for banks is also a great indicator of value. KEY has a metric of 0.89x versus 0.94x for Fifth Third Bancorp (NASDAQ - FITB) and 1.25x for Huntington Bancshares, Inc. (NASDAQ – HBAN), it’s Cincinnati and Columbus based fellow Ohio competitors.
KEY appears to be a great undervalued play on a growing region. A short float of just 5.3% indicates a great deal of ‘long’ belief in the stock. Look for KEY to climb back to the $13.50 level by the end of the summer.
Have a great day!
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