VLY - 1 More Reason to Believe in This Beaten-Down Bank Stock
Recently, I wrote an article about the potential value opportunity in the British bank Barclays (NYSE: BCS) , which is largely involved in investment banking and consumer banking in many parts of the world including the U.S. and Europe. Currently, the bank trades at the very low valuation of just 53% of tangible book value (TBV), which measures what a bank would be worth if it were immediately liquidated.
Now the British lender has traded at a low valuation for a long time, so I can understand the skepticism about its stock. Yet management believes the bank can generate a 10% return on tangible equity this year, which is the technical return Barclays expects to make on shareholders' equity minus goodwill and intangible assets. The bank has also been buying back stock over the last year for the first time in a while, which can help the stock a lot at its current low valuation. But recently, I have come across another reason that continues to support my stance on Barclays.
Since the end of 2020, foreign banks have been exiting and selling their consumer banking operations in the U.S. The Spanish lender BBVA (NYSE: BBVA) announced that it would sell its U.S. operations to PNC Financial Services Group (NYSE: PNC) , and HSBC (NYSE: HSBC) announced it would sell most of its U.S. consumer bank to Citizens Financial Group (NYSE: CFG) . More recently, the Japanese bank Mitsubishi UFJ Financial Group Inc (NYSE: MUFG) announced it would sell to U.S. Bancorp (NYSE: USB) , and in a smaller deal, the Israeli bank Bank Leumi Le Israel announced it would sell its U.S. subsidiary to Valley National Bancorp (NASDAQ: VLY) .
For further details see:
1 More Reason to Believe in This Beaten-Down Bank Stock