KeyCorp Getting More Credit For Loan Growth And Expense Leverage

I had very mixed feelings about KeyCorp (KEY) back at the start of 2019, as I didn’t love the company’s far-flung franchise footprint, it’s lack of real deposit market share leverage, and largely middle-of-the-road financial metrics. On the other hand, I thought the share price and valuation was far too low even factoring all of those issues into the analysis. Since then, KeyCorp has been a strong outperformer, with the shares up 15% since that last article and outperforming its peer group by around 6% to 10% on a year-to-date basis depending on how you construct the peer list.

I still believe KeyCorp shares are undervalued. Yes, there is risk in the transition to a new CEO and the company has had its issues meeting operating leverage expectations, but loan growth is healthy and the bank’s liquidity should help partially offset some of its spread risk. I’d like to see KeyCorp take a stronger “get better or get out” hand with its footprint, but I do still see upside in the name.

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KeyCorp Getting More Credit For Loan Growth And Expense Leverage