When I wrote about Zions Bancorpation (ZION) after third quarter earnings,
I wrote that Zions was a quality bank that was mismatched the current
phase of the cycle and not really cheap enough for a “pay you to wait”
play. The shares are down a bit since then, underperforming broader
banking indices, but that came mostly with the negative reaction to
earnings (which included at least two downgrades).
Although
Zions’ valuation is not demanding, I think investors are likely looking
at at least three, and maybe four or five, quarters of negative
year-over-year pre-provision comps and even management thinks that
positive operating leverage might be out of reach in 2020. Valuation and
a high-quality (if asset-sensitive) business keep this on the watch
list, but I need a bigger discount to fair value or more confidence on
near-term earnings momentum to step up.
Follow this link for more:
Sluggish Loan Growth, Spread Pressure, And Limited Op Leverage Making It Hard For Zions To Get Ahead
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