I've seen a quote attributed to Warren Buffett that goes "price is what you pay and value is what you get". With that in mind, Fifth Third (NASDAQ:FITB)
does indeed look undervalued today but there are reasons why the stock
has been weak over the last year (down almost 18%) and a real laggard
next to peers like U.S. Bancorp (NYSE:USB), Wells Fargo (NYSE:WFC), and Huntington Bancshares (NASDAQ:HBAN).
From
the sounds of it, 2015 is going to be a challenging year for Fifth
Third. Management's loan growth guidance doesn't compare well to what
other banks in overlapping regions are seeing and the wind down of a
consumer advance product is going to create a significant headwind.
Amidst all that, management is not looking for any positive operating
leverage.
Why be positive? A bad year (or two) doesn't make a bad
bank and Fifth Third shares are priced for virtually no improvement in
ROE over the coming years. Fifth Third has a good collection of
fee-generating operations and relatively good exposure to growing
banking markets. Fifth Third isn't going to appeal to investors that
prize quality in banking stocks, but there is enough upside here to make
a closer look worth the effort.
Read the full article here:
Fifth Third Looks Undervalued, But Not Without Some Reasons
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