4 Top Bank Stock Picks From Deutsche Bank

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Fifth Third BancorpFITB
,
PNC Financial ServicesPNC
,
Regions FinancialRF
and
Sun Trust BanksSTI
were among the bank stocks featured in a Deutsche Bank research report this week. While the analysts did see improved credit profiles, a decrease in consumer deleveraging, better capital levels and across-the-board cost savings in the industry, many financials also faced headwinds from weak loan growth, decreasing mortgage production revenues and the end of the Federal Reserve's quantitative easing program. Note that the stocks of mega-cap financials Goldman Sachs and J.P. Morgan also made the cut in the Deutsche Bank report.
See also:Morgan Stanley Sees Decent Upside For J.P. Morgan Chase
Fifth Third Bancorp
Analysts underestimated per-share earnings of this Cincinnati-based bank in the past four quarters by as much as almost 18 percent. The company sports a market capitalization of more than $19 billion, with a dividend yield near 2.2 percent. Its 11.2 P/E ratio is less than the industry average. Five of the 31 analysts surveyed by Thomson/First Call rate the stock at Strong Buy, and 10 more also recommend buying shares. The mean price target, or where analysts expect the share price to go, is about four percent higher than the current share price. Deutsche Bank sees no upside potential now. Shares hit a new multiyear high on Thursday and now are up almost seven percent year to date. Shares are trading more than 20 percent higher than six months ago. In that time, the stock has outperformed not only competitors PNC Financial and U.S. Bancorp, but the broader markets as well.
PNC Financial Services
This Pittsburgh-based company recently revealed receipt a Department of Justice subpoena concerning its mortgage lending practices. Its market cap is more than $44 billion, and its dividend yield is about 2.1 percent. Its P/E ratio of 11.3 is less than the industry average. Just 13 of the 31 analysts surveyed recommend buying shares, though only one rates the stock at Underperform. They see a little room for shares to run, as their mean price target is more than four percent higher than the current share price. Deutsche Bank's price target is less than the consensus. The share price is about eight percent higher year to date, but down less than two percent from a recent 52-week high. It is still above the 50-day and 200-day moving averages. The stock has narrowly underperformed Huntington Bancshares and U.S. Bancorp over the past six months.
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Regions Financial
Regions Financial recently launched its Commercial Insights section on Regions.com, a resource for commercial clients. The Birmingham, Alabama-based company has a market cap of more than 15 billion. Its dividend yield is about 1.1 percent, and the long-term EPS growth forecast is about eight percent. Five of the 30 polled analysts rate the stock at Strong Buy, and 12 more also recommend buying shares. They see a little headroom for shares, as their mean price target is less than five higher than the current share price. But the Deutsche Bank target suggests about eight percent upside potential. The share price is less than six percent higher than a month ago and above the 50-day and 200-day moving averages. It is up more than 13 percent over the past six months. In that time, the stock narrowly underperformed BB&T and Sun Trust Banks, but its performance is in line with the S&P 500.
See also:Berkshire Hathaway: Playing Catch-Up With The MarketSun Trust Banks
This Atlanta-based company recently warned of possible "substantial penalties" from an ongoing mortgage-related probe. It has a market cap near $16.5 billion, and it offers a dividend yield around 1.1 percent. The long-term EPS growth forecast is less than eight percent and the return on equity is about eight percent. Of the 31 analysts surveyed, 13 recommend buying the shares, and the rest rate the stock at Hold. A move to the analysts' mean price target would represent a less than four percent gain for shareholders. The Deutsche Bank price target is a little less than the consensus estimate. The share price is more than six percent higher year to date, but down more than two percent from a 52-week high in January. It is north of the 50-day and 200-day moving averages. The stock has outperformed not only the S&P 500 over the past six months, but BB&T and Regions Financial as well.
At the time of this writing, the author had no position in the mentioned equities.
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Posted In: Trading IdeasBB&TDeutsche BankFifth Third BancorpGoldman SachsHuntington BancsharesJ.P. Morganpnc financial servicesregions financialSun Trust BanksU.S. Bancorp
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