{"id":38703,"date":"2020-05-06T18:40:00","date_gmt":"2020-05-06T18:40:00","guid":{"rendered":"https:\/\/wp2.inovestor.com\/2020\/05\/5-u-s-banks-with-solid-balance-sheets\/"},"modified":"2022-07-06T21:19:54","modified_gmt":"2022-07-06T21:19:54","slug":"5-u-s-banks-with-solid-balance-sheets","status":"publish","type":"post","link":"https:\/\/www.inovestor.com\/en-ca\/2020\/05\/5-u-s-banks-with-solid-balance-sheets\/","title":{"rendered":"5 U.S. banks with solid balance sheets"},"content":{"rendered":"

What are we looking for?<\/span><\/b><\/p>\n

The Canadian banking sector is widely considered to be one of the best and safest banking systems in the world, which explains why Canadians are heavily invested in the six major banks. However, the financial sector,<\/span>\u00a0<\/i><\/span>represents 32 per cent of the S&<\/span>P\/TSX Composite Index. To diversify their portfolios, investors might want to consider investing in the U.S. banking\u00a0<\/span>sect<\/span>or.\u00a0<\/span>In the aftermath of the financial crisis, U.S. banks have become better capitalized,<\/span>\u00a0<\/span>with an increased focus toward a more sustaina<\/span>ble business model. Today, we<\/span>\u00a0will be<\/span>\u00a0looking at five dividend-paying U.S.-based banks with solid balance sheets.<\/span><\/p>\n

The screen<\/span><\/b><\/p>\n

Our screen of the banks’ subsector of the U.S. financials sector is based on the following criteria:<\/span><\/p>\n

Market cap of at least US$10-billion;<\/span><\/p>\n

-A positive EVA figure. Economic value-added (EVA) is a measure of true economic profit created by a company. EVA is calculated by subtracting the Capital charges from the NOPAT (Net Operating Profit After Taxes).\u00a0<\/span>The higher the economic value-added is, the more value a company is generating for its investors;<\/span><\/p>\n

-An EPI figure of at least one. The economic performance index (EPI) is the main indicator to identify how much wealth is redistributed to the shareholders. The higher the figure, the better, and a negative EPI means that the company is not covering its costs of capital;<\/span><\/p>\n

-Dividend yield of at least 3 per cent. We are looking for banks that consistently share their profits with the shareholders;<\/span><\/p>\n

Positive earnings per share. We are looking for profitable companies only;<\/span><\/p>\n

-A price-to-intrinsic value of between 0.5 and two. Price\/IV is the price of the stock divided by the intrinsic value of the stock.\u00a0<\/span>We are avoiding overvalued and value trap stocks.<\/span><\/p>\n

-Long term debt-to-equity ratio below two: We are looking for banks with solid bank sheet and low long term debt;<\/span><\/p>\n

-Current SP score of at least 55:\u00a0The SP Score is a proprietary scoring system based on StockPointer\u2019s model. It\u2019s a 12 factors algorithm with a focus on quality and value.\u00a0<\/span>This metric\u00a0<\/span>represents the overall performance of a company by considering multiple risk and performance factors. A high score indicates a high quality stock trading at a reasonable price. (The score range between zero and 100)<\/span><\/p>\n

For informational purposes, we have also included recent stock price and one-year return. Please note that some ratios may have been reported at the end of the previous quarter.<\/span><\/p>\n

What we found<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
TICKER<\/td>\nCOMAPNY<\/td>\nRECENT PRICE ($)<\/td>\nEVA ($MIL.)<\/td>\nMKT CAP ($MIL.)<\/td>\nEPI<\/td>\nLT DEBT<\/td>\nDIV. YIELD (%)<\/td>\nPrice \/ IV<\/td>\nEPS<\/td>\nCURRENT SP SCORE<\/td>\n1YR PRICE RTN.(%)<\/td>\nLT DEBT \/ EQUITY<\/td>\n<\/tr>\n
JPM-N<\/td>\nJpmorgan Chase & Co.<\/td>\n93.25<\/td>\n1029.82<\/td>\n284090.00<\/td>\n1.00<\/td>\n299344.0<\/td>\n3.89<\/td>\n1.08<\/td>\n8.88<\/td>\n65<\/td>\n-17.48<\/td>\n1.05<\/td>\n<\/tr>\n
USB-N<\/td>\nU.s. Bancorp<\/td>\n34.94<\/td>\n1214.38<\/td>\n53215.13<\/td>\n1.15<\/td>\n52298.0<\/td>\n4.73<\/td>\n0.93<\/td>\n3.93<\/td>\n65<\/td>\n-31.55<\/td>\n0.98<\/td>\n<\/tr>\n
NTRS-Q<\/td>\nNorthern Trust Corporation<\/td>\n75.47<\/td>\n227.54<\/td>\n15700.09<\/td>\n1.16<\/td>\n4142.2<\/td>\n3.58<\/td>\n1.18<\/td>\n6.73<\/td>\n64<\/td>\n-19.68<\/td>\n0.26<\/td>\n<\/tr>\n
DFS-N<\/td>\nDiscover Financial Services<\/td>\n41.37<\/td>\n806.58<\/td>\n12672.10<\/td>\n1.41<\/td>\n26098.0<\/td>\n4.82<\/td>\n0.67<\/td>\n6.74<\/td>\n68<\/td>\n-47.27<\/td>\n2.06<\/td>\n<\/tr>\n
SYF-N<\/td>\nSynchrony Financial<\/td>\n18.51<\/td>\n1178.58<\/td>\n10798.20<\/td>\n1.45<\/td>\n16063.0<\/td>\n5.41<\/td>\n0.54<\/td>\n4.46<\/td>\n58<\/td>\n-42.92<\/td>\n1.49<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Five names made today\u2019s list, ranked by market cap,\u00a0<\/span>JPMorgan Chase & Co.<\/span><\/b>, which shows the highest EPS, has been growing its revenues constantly since 2015. Although the bank\u2019s\u00a0<\/span>performance spread (ROC – COC) was negative<\/span>\u00a0from 2016 to 2018, it\u00a0has been positive\u00a0<\/span>for the past two years, which is a good indication for shareholders. <\/span><\/p>\n

U.S. Bancorp<\/span><\/b>\u00a0is also a big player in the banking sector with a market cap of US$51-billion. The bank has beaten or matched EPS estimates for the past five years. The bank missed its last earnings estimate because of loan defaults related to COVID-19. With a cu<\/span>rrent operating value of US$55.8-billion, the bank is trading at an 8 per cent discount compared with its current market value. At a current price of $35 per\u00a0<\/span>share,<\/span>\u00a0<\/span>it\u2019s worth considering adding it to your portfolio.<\/span><\/p>\n

For more details about JPMorgan and U.S Bancorp stock and performance, please subscribe the Investor for Advisor<\/a> platform for free<\/span><\/p>\n

For readers with an Inovestor for Advisors account,\u00a0Here<\/a>\u00a0is the screener we used<\/p>\n","protected":false},"excerpt":{"rendered":"

What are we looking for? The Canadian banking sector is widely considered to be one of the best and safest banking systems in the world, which explains why Canadians are heavily invested in the six major banks. However, the financial sector,\u00a0represents 32 per cent of the S&P\/TSX Composite Index. To diversify their portfolios, investors might […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[214,166],"class_list":["post-38703","post","type-post","status-publish","format-standard","hentry","category-number-cruncher-extra","tag-financials","tag-us"],"acf":[],"yoast_head":"\n5 U.S. banks with solid balance sheets - Inovestor<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.inovestor.com\/en-ca\/2020\/05\/5-u-s-banks-with-solid-balance-sheets\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"5 U.S. banks with solid balance sheets\" \/>\n<meta property=\"og:description\" content=\"What are we looking for? The Canadian banking sector is widely considered to be one of the best and safest banking systems in the world, which explains why Canadians are heavily invested in the six major banks. However, the financial sector,\u00a0represents 32 per cent of the S&P\/TSX Composite Index. 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