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Strategies & Market Trends : Value Investing
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To: blankmind who wrote (25083)10/22/2006 2:51:27 PM
From: Paul Senior  Read Replies (1) of 78476
 
Blankmind, I do believe these companies should be selling at or better than their book value. They mostly do, based on my experience. (Or will do eventually, like CSBK might.) Perhaps even those who don't use stated or tangible book value might rate book value a little more relevant for the banking sector. Imo because depreciation isn't quite the suspect component - much banking assets being "money", which is not depreciable.

The negative here for me - based on how I tend to look at bank stocks and which is just my way - is that I like to see high return on assets compared to price/book value. CSBK seems to have a low roa figure compared to stated book value and a worse comparison when roa is compared to the higher tangible book value the company may have. So I'm staying away.

OTOH, perhaps those "inefficient" assets could be better managed to improve roa as the bank sees pressure from key shareholders (bank transitions to a public company mindset). That might kick up earnings and share price.
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