Banking & Finance

10 Big Financial Stocks at Deep Discounts to Book Value

3. Prudential: 0.37 Times Book Value

Prudential Financial Inc. (NYSE: PRU) is still rather large and comes with a very high dividend yield, but that seems sustainable despite an expected earnings drop of 20% from 2019. While offering investment services, insurance and other financial products, Prudential has more than 50,000 employees and operates via eight units. Despite having lost a third of its value from the high over the past year, Prudential was a $115 stock at the end of 2017.

Prudential closed at $64.03 on Monday, in a 52-week range of $38.62 to $97.24. It has a market cap of $25.5 billion and a current dividend yield of 7.1%. To figure where normalized earnings might go back to in the future, note that the company reported $11.69 in EPS for the 2019 full year, and that would value it at 5.5 times past earnings

4. AIG: 0.38 Times Book Value

American International Group Inc. (NYSE: AIG) is still down almost 50% from its January highs, and the insurance giant remains a shadow of its former self. Despite an expected contraction in earnings, it still is expected to have ample dividend coverage and earnings are expected to snap back to more than 90% of the 2019 level next year. Despite a more focused and safer operating profile since its debacle in the Great Recession, AIG covers insurance products for commercial, institutional and individual customers in North America and many other countries.

AIG closed at $27.63 on Monday, in a 52-week range of $16.07 to $56.42. It has a market cap of $23.9 billion and a current dividend yield of 4.8%. To figure where normalized earnings might go back to in the future, note that the company reported $4.59 in EPS for the 2019 full year, and that would value it at 6.1 times past earnings.

5. MetLife: 0.44 Times Book Value

MetLife Inc. (NYSE: MET) has been trading more or less sideways since May, and most of the great analyst calls with bold targets are old. Its shares are weak enough that the dividend yield was above 5% recently, but it still has more than ample dividend coverage if earnings are down only 10% as the pack of analysts sees in 2020. Those analysts also expect a rapid return to almost 2019 earnings in 2021. MetLife has been jumping on the “green” themes of late as well, and the company announced recently that it plans to spend about $1.7 billion to acquire Versant for vision insurance.

MetLife closed at $37.25 on Monday, in a 52-week range of $22.85 to $53.28. It has a market cap of $34.0 billion. The current dividend yield is 5.1%. To figure where normalized earnings might go back to in the future, note that the company reported $6.11 in EPS for the 2019 full year, and that would value it at 6.1 times past earnings.

6. Citigroup: 0.50 Times Book Value

Citigroup Inc. (NYSE: C) has had the deepest discount of the big money-center banks and mega financials. The bank recently made history by naming a woman to be its chief executive officer. After dipping under $40 a share in the March panic selling, the rapid recovery to above $60 by early June was very short-lived. There was no real earnings bump in July, and it really has not done much but fall since that time. Higher credit losses, lower activity, lower net interest margins and other aspects are weighing on the stock. despite a very strong international presence that is hard to replicate.

Citigroup closed at $43.34 on Monday, in a 52-week range of $32.00 to $83.11. It has a market cap of $90.5 billion. The banking company/insurance carrier has a current dividend yield of 4.9%. To figure where normalized earnings might go back to in the future, note that the company reported $8.04 in EPS for the 2019 full year, and that would value it at 5.4 times past earnings.

7. Citizens Financial: 0.51 Times Book Value

Citizens Financial Group Inc. (NYSE: CFG) is the parent of Citizens Bank, with operations for commercial and consumer banking and financial services in the New England, Mid-Atlantic and Midwest regions with close to 2,700 ATMs and 1,100 branches. It is nearing 200 years since its first founding. With a market cap that is still near $10 billion and with $165 billion in assets at the end of 2019, rising to almost $180 billion in assets at the end of June 2020, its book value held steady at close to $32 per share and was still up 4% from the June 2019 book value. The bank has cited strength in mortgages and ample reserves for credit losses tied to and expected from the COVID-19 fallout.

Citizens Financial closed at $25.34 on Monday, in a 52-week range of $14.12 to $41.29. It has a market cap of $10.8 billion. The banking company also has a current dividend yield of 6.4%. To figure where normalized earnings might go back to in the future, note that the company reported $3.81 in EPS for the 2019 full year, and that would value it at 6.7 times past earnings.

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