When Cheap Banks Just Aren't Worth It

In the following video, Motley Fool financial analysts David Hanson and Matt Koppenheffer discuss a balanced approach to valuing bank equities.

David compares Bank of America's relatively cheap stock price and current low returns on equity with US Bancorp , a stock currently trading at a much higher valuation compared to tangible book value.

David also explains how Citigroup and Bank of America's current low valuations may represent a longer-term opportunity for investors, and he looks at Wells Fargo as an example of how a bank stock might provide great returns to investors in the future, despite a relatively high current valuation.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help you figure out whether US Bancorp is a buy today, you can read our premium research report on the company. Click here now for instant access!

The article When Cheap Banks Just Aren't Worth It originally appeared on Fool.com.

David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Wells Fargo and owns shares of Bank of America, Citigroup, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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