Analyzing value in US banks

Why banks are better businesses to invest in today is explained by Bill Nygren, CIO-US, Portfolio Manager, Harris Associates.

Why US banks appear to be significantly better value investments today versus 15 years ago is explained by value investing expert Bill Nygren, CFA®, CIO-US, Portfolio Manager at Harris Associates, adviser to the Oakmark Funds. Video highlights include:
  • Banks carry much less risk today because of better quality lending and significantly more equity, relative to the size of their balance sheets.
  • Banks sell at about 80% of book value today, and eight times earnings.
  • Slower consumer spending should not be an issue for quality-run banks.
  • Institutions within the financials sector are not priced like they are growth vehicles. Mid- and large-sized banks have become comfortable returning capital to shareholders and measuring their success by revenue per share and earnings per share.
The information, data, analyses, and opinions presented herein (including current investment themes, the portfolio managers’ research and investment process, and portfolio characteristics) are for informational purposes only and represent the investments and views of the portfolio managers and Harris Associates L.P. as of January 17, 2024 and are subject to change and may change based on market and other conditions and without notice. This content is not a recommendation of or an offer to buy or sell a security and is not warranted to be correct, complete or accurate.

There can be no assurance that developments will transpire as forecasted. Actual results may vary.

Investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.

The price to earnings ratio (“P/E”) compares a company's current share price to its per-share earnings. It may also be known as the "price multiple" or "earnings multiple" and gives a general indication of how expensive or cheap a stock is. Investors should not base investment decisions on any single attribute or characteristic data point.

Natixis Distribution, LLC (Member FINRA|SIPC) is a marketing agent for the Oakmark Funds, a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.