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A Trio of Graham-Style Regional Bank Stocks to Consider

GuruFocus.com
·4 min read

- By Alberto Abaterusso

To enhance the effectiveness of screening for value opportunities, one method is to choose stocks whose "Graham blended multiplier" is less than 22.5. Created by Benjamin Graham, the father of value investing, the multiplier is equal to the stock's price-earnings ratio multiplied by its price-book ratio.

Thus, value investors may want to have a look at the following securities since their Graham blended multipliers are less than 22.5.


Atlantic Union Bankshares

The first stock investors should have a look at is Atlantic Union Bankshares Corp. (NASDAQ:AUB), a Richmond, Virginia-based holder of Atlantic Union Bank, a regional bank that serves consumers and businesses.

The stock has a Graham blended multiplier of 16.4, as the price-earnings ratio is 17 (versus the industry median of 11.6) and the price-book ratio is 0.96 (versus the industry median of 0.9).

Atlantic Union Bankshares Corp's stock traded at $32.54 per share at close on Dec. 18 for a market capitalization of $2.56 billion.

The share price has fallen 15.41% over the past year for a 52-week range of $18.55 to $38.77.

A Trio of Graham-Style Regional Bank Stocks to Consider
A Trio of Graham-Style Regional Bank Stocks to Consider

The stock gives trailing 12-month and forward dividend yields of 3.07% as of Dec. 18. The most recent payment, a quarterly cash dividend of 25 cents per common share, was made on Nov. 27.

GuruFocus assigned a score of 3 out of 10 to the company's financial strength and of 4 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $32 per share.

First Interstate BancSystem

The second stock investors should have a look at is First Interstate BancSystem Inc (NASDAQ:FIBK), a Billings, Montana-based holder of First Interstate Bank, a regional bank that provides several banking products and services to consumers and businesses.

The stock has a Graham blended multiplier of 19.94, as the price-earnings ratio is 15.58 (versus the industry median of 11.57) and the price-book ratio is 1.28 (versus the industry median of 0.86).

First Interstate BancSystem's stock traded at $40.19 per share at close on Dec. 18 for a market capitalization of $2.54 billion.

The share price has fallen by 5.41% over the past year, determining a 52-week range of $24.5 to $42.9.

A Trio of Graham-Style Regional Bank Stocks to Consider
A Trio of Graham-Style Regional Bank Stocks to Consider

The stock offers a trailing 12-month dividend yield of 3.48% and a forward dividend yield of 3.77% as of Dec. 18. The most recent payment, a quarterly cash dividend of 38 cents per common share, was made on Nov. 16.

GuruFocus assigned a rating of 4 out of 10 to both the company's financial strength and its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $40.67 per share.

United Community Banks

The third company investors should consider is United Community Banks Inc. (NASDAQ:UCBI), a Blairsville, Georgia-based holder of United Community Bank, a regional bank that provides a broad range of banking products and services to consumers and businesses.

The stock has a Graham blended multiplier of 19.7, as the price-earnings ratio is 15.14 (versus the industry median of 11.57) and the price-book ratio is 1.3 (versus the industry median of 0.9).

United Community Banks traded at $28.01 per share at close on Dec. 18 for a market capitalization of $2.43 billion.

The share price has fallen by 8.67% over the past year for a 52-week range of $14.95 to $31.66.

A Trio of Graham-Style Regional Bank Stocks to Consider
A Trio of Graham-Style Regional Bank Stocks to Consider

The stock gives trailing 12-month and forward dividend yields of 2.57% as of Dec. 18. The most recent payment, a quarterly cash dividend of 18 cents per common share, was made on Oct. 5. The next distribution is scheduled for payment on Jan. 5, 2021.

GuruFocus assigned a score of 4 out of 10 to both the company's financial strength and its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $28.69 per share.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.