This Screamingly Cheap Bank Stock Is About to Unleash a Buyback Bazooka
During this time of economic uncertainty, sentiment on bank stocks is low as investors are hesitant to buy such names ahead of a potential recession. However, that has left many bank stocks looking quite cheap today.
While many bank stocks have pulled back on share repurchases over the past year due to regulatory capital raises and in preparation for a more challenging economy, it appears bigger capital cushions and falling inflation have now spurred some back into the market. For instance, JPMorgan & Chase (NYSE: JPM) just announced it would resume buybacks after a months-long pause and after achieving a capital-ratio requirement of 13.2% on its way to 13.5% next year.
But if multiples remain compressed for some time, that means the cheapest bank stocks have a big opportunity to repurchase lots of their own stock over the next couple of quarters. And credit card giant Discover Financial Services (NYSE: DFS), among the cheapest of the large banks, just announced a massive buyback plan that could retire nearly 8% of its shares in just six months.
Source Fool.com
