MW Here are some bargain bank stocks heading into earnings season
By Philip van Doorn
A close look at valuations for the largest U.S. banks highlights opportunities for long-term investors
The valuation for Capital One's stock is especially compelling for long-term investors, according to Matt Stucky, the chief portfolio manager at Northwestern Mutual Wealth Management, and Macrae Sykes, who manages the Gabelli Financial Services Opportunities ETF.
Most of the largest U.S. banks are trading at lower forward price-to-earnings valuations than they were at the end of 2025, even as earnings estimates have increased for all of them.
Three banking-industry experts discussed opportunities for long-term investors heading into earnings season during interviews with MarketWatch. Goldman Sachs $(GS)$ will announce its second-quarter results on Monday, followed by JPMorgan Chase $(JPM)$, Citigroup $(CUL3)$ and Wells Fargo $(WFC)$ on Tuesday and Bank of America (BAC) and Morgan Stanley $(MS)$ on Wednesday.
Before digging into those comments, let's look at forward price-to-earnings ratios for 20 of the largest U.S. banks. There are 24 stocks in the Invesco KBW Bank exchange-traded fund KBWB, which tracks the KBW Nasdaq Bank Index BKX, and 149 in the State Street SPDR Regional Banking ETF KRE, which tracks the S&P Regional Banks Select Industry Index. The following list includes the 17 largest banks by total assets in either of these exchange-traded funds, with Charles Schwab $(SCHW)$, American Express $(AXP)$ and Ally Financial $(ALLY)$ added, since they are all bank holding companies with at least $150 billion in deposits.
A stock's forward P/E is its price divided by the consensus 12-month earnings-per-share estimate among analysts polled by LSEG. A bank's forward P/E may have declined even though its share price increased from the end of last year through Wednesday, if its rolling 12-month EPS estimate increased enough. This was the case for Citigroup (C), for example.
The list of 20 banks is sorted by Dec. 31 total assets and includes forward P/E ratios at Wednesday's close and at the end of 2025, as well as changes in the "P" and in the "E" so far this year. The price changes exclude dividends.
Company Forward P/E Forward P/E as of Dec. 31 2026 price change Change in rolling 12-month EPS estimate Total assets ($billion) JPMorgan Chase 13.8 15.2 -4.4% 5.3% $4,425 Bank of America 11.3 12.6 -5.7% 4.8% $3,412 Citigroup 11.2 11.6 5.8% 10.1% $2,657 Wells Fargo 11.5 13.2 -9.2% 4.9% $2,149 Goldman Sachs Group 14.8 15.6 3.0% 8.7% $1,809 Morgan Stanley 14.8 16.5 -0.9% 10.3% $1,420 U.S. Bancorp 10.5 10.8 3.7% 6.7% $692 Capital One Financial 8.9 11.6 -20.6% 2.8% $669 PNC Financial Services Group 11.5 11.6 5.8% 7.4% $574 Truist Financial 10.5 11.0 0.2% 5.0% $548 Charles Schwab 15.2 17.8 -3.2% 13.4% $491 Bank of New York Mellon 14.5 14.2 10.2% 7.6% $472 State Street 10.9 11.3 5.5% 9.3% $366 American Express 17.2 21.1 -14.5% 5.1% $300 Citizens Financial Group 11.5 11.6 9.2% 10.3% $226 Huntington Bancshares 9.6 10.2 -5.8% 0.0% $225 Fifth Third Bancorp 11.9 12.7 5.4% 13.0% $214 M&T Bank 11.2 10.7 8.7% 4.0% $214 Ally Financial 7.4 8.4 -7.9% 3.7% $196 KeyCorp 11.1 11.6 3.1% 7.3% $184 Source: LSEG
You might need to scroll the table or flip your screen to landscape to see all of the data. You can click on the tickers for more information, including profiles of each bank and dividend yields for the stocks.
What to look (or listen) for when the banks report
Macrae Sykes is the portfolio manager of the Gabelli Financial Services Opportunities ETF GABF. He said that at the beginning of 2026, investors were enthusiastic about banks because of the "fruitful environment with regulatory tailwinds, a good M&A environment and steepening yield curve, with upbeat feelings for the economy."
A lot has changed since then, with the Iran conflict, the spike in energy prices and an evolving outlook for monetary policy. The Federal Open Market Committee is expected to make one cut to short-term interest rates this year, while Federal Reserve's previous economic projections had implied two or three cuts.
This earnings season Sykes expects to see slow loan growth but also "a fiscal tailwind" from tax refunds and a benefit to banks involved with underwriting and merger deals. Initial public offerings of stock (and concurrent fees to investment banks) may spike with an expected near-term offering of SpaceX shares, as well as efforts to take artificial-intelligence companies OpenAI and Anthropic public.
He said U.S. consumers seemed to be "in pretty good shape," with stable credit quality, even as investors were concerned about private credit.
So even as "you have to build in some risk premium, with inflation and the [Iran conflict possibly] being dragged out ... one can argue that the [IPO and underwriting] pipeline should be converted," Sykes said.
Matt Stucky, the chief portfolio manager at Northwestern Mutual Wealth Management, said that investors would be looking for more clarity next week about banks' exposure to private credit. Nonbank lenders that aren't publicly traded, including some business development companies, have been facing a spike in redemption requests that could be difficult or impossible to meet because there is no liquid market for the loans.
Stucky said that among major banks, there was roughly a 4% exposure within loan portfolios to nondepository financial institutions.
He also said U.S. consumers had been showing resiliency despite the increase in gasoline prices.
When discussing the "higher for longer" scenario with fewer interest-rate cuts by the Fed, Stucky said this would actually be a positive factor for most of the large banks, including Bank of America, which pays next to nothing for checking-account deposits. Reductions in short-term rates were more likely to benefit American Express (AXP) and Capital One Financial $(COF)$, he said.
Ebrahim Poonawala, the head of research for North American banks at BofA Securities, said a reduced number of rate cuts by the Fed would be "generally constructive for the two most asset-sensitive," namely JPMorgan Chase and Wells Fargo. "But it is positive for all the big money-center banks," he said.
An asset-sensitive bank is one for which loans reprice more quickly than deposits. This means that its net interest margin widens when short-term rates rise. A liability-sensitive bank will benefit quickly from a decline in short-term rates, as its cost of funds declines more rapidly than its loans mature and are renewed at lower rates.
In a report on Tuesday, Poonawala predicted that "three C's" would dominate bank executives' earnings calls next week. These are capital-market resiliency, capital deployment and credit quality.
Capital deployment is an important subject for bank-stock investors as banks increase dividends and repurchase stock to reduce share counts and lift earnings per share. This could be a year of extraordinary increases in capital deployment, because the Federal Reserve's board of governors announced on Feb. 4 that the regulator's annual stress tests would be on hold until 2027. The banks will continue to operate under the Fed's mid-2025 capital guidelines.
Poonawala wrote in his Tuesday report that among the banks covered by his team, JPMorgan Chase was best positioned to deploy capital. He called it "a top choice for medium- to longer-term investors."
MW Here are some bargain bank stocks heading into earnings season
By Philip van Doorn
A close look at valuations for the largest U.S. banks highlights opportunities for long-term investors
The valuation for Capital One's stock is especially compelling for long-term investors, according to Matt Stucky, the chief portfolio manager at Northwestern Mutual Wealth Management, and Macrae Sykes, who manages the Gabelli Financial Services Opportunities ETF.
Most of the largest U.S. banks are trading at lower forward price-to-earnings valuations than they were at the end of 2025, even as earnings estimates have increased for all of them.
Three banking-industry experts discussed opportunities for long-term investors heading into earnings season during interviews with MarketWatch. Goldman Sachs (GS) will announce its second-quarter results on Monday, followed by JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) on Tuesday and Bank of America (BAC) and Morgan Stanley (MS) on Wednesday.
Before digging into those comments, let's look at forward price-to-earnings ratios for 20 of the largest U.S. banks. There are 24 stocks in the Invesco KBW Bank exchange-traded fund KBWB, which tracks the KBW Nasdaq Bank Index BKX, and 149 in the State Street SPDR Regional Banking ETF KRE, which tracks the S&P Regional Banks Select Industry Index. The following list includes the 17 largest banks by total assets in either of these exchange-traded funds, with Charles Schwab (SCHW), American Express (AXP) and Ally Financial (ALLY) added, since they are all bank holding companies with at least $150 billion in deposits.
A stock's forward P/E is its price divided by the consensus 12-month earnings-per-share estimate among analysts polled by LSEG. A bank's forward P/E may have declined even though its share price increased from the end of last year through Wednesday, if its rolling 12-month EPS estimate increased enough. This was the case for Citigroup (C), for example.
The list of 20 banks is sorted by Dec. 31 total assets and includes forward P/E ratios at Wednesday's close and at the end of 2025, as well as changes in the "P" and in the "E" so far this year. The price changes exclude dividends.
Company Forward P/E Forward P/E as of Dec. 31 2026 price change Change in rolling 12-month EPS estimate Total assets ($billion) JPMorgan Chase 13.8 15.2 -4.4% 5.3% $4,425 Bank of America 11.3 12.6 -5.7% 4.8% $3,412 Citigroup 11.2 11.6 5.8% 10.1% $2,657 Wells Fargo 11.5 13.2 -9.2% 4.9% $2,149 Goldman Sachs Group 14.8 15.6 3.0% 8.7% $1,809 Morgan Stanley 14.8 16.5 -0.9% 10.3% $1,420 U.S. Bancorp 10.5 10.8 3.7% 6.7% $692 Capital One Financial 8.9 11.6 -20.6% 2.8% $669 PNC Financial Services Group 11.5 11.6 5.8% 7.4% $574 Truist Financial 10.5 11.0 0.2% 5.0% $548 Charles Schwab 15.2 17.8 -3.2% 13.4% $491 Bank of New York Mellon 14.5 14.2 10.2% 7.6% $472 State Street 10.9 11.3 5.5% 9.3% $366 American Express 17.2 21.1 -14.5% 5.1% $300 Citizens Financial Group 11.5 11.6 9.2% 10.3% $226 Huntington Bancshares 9.6 10.2 -5.8% 0.0% $225 Fifth Third Bancorp 11.9 12.7 5.4% 13.0% $214 M&T Bank 11.2 10.7 8.7% 4.0% $214 Ally Financial 7.4 8.4 -7.9% 3.7% $196 KeyCorp 11.1 11.6 3.1% 7.3% $184 Source: LSEG
You might need to scroll the table or flip your screen to landscape to see all of the data. You can click on the tickers for more information, including profiles of each bank and dividend yields for the stocks.
What to look (or listen) for when the banks report
Macrae Sykes is the portfolio manager of the Gabelli Financial Services Opportunities ETF GABF. He said that at the beginning of 2026, investors were enthusiastic about banks because of the "fruitful environment with regulatory tailwinds, a good M&A environment and steepening yield curve, with upbeat feelings for the economy."
A lot has changed since then, with the Iran conflict, the spike in energy prices and an evolving outlook for monetary policy. The Federal Open Market Committee is expected to make one cut to short-term interest rates this year, while Federal Reserve's previous economic projections had implied two or three cuts.
This earnings season Sykes expects to see slow loan growth but also "a fiscal tailwind" from tax refunds and a benefit to banks involved with underwriting and merger deals. Initial public offerings of stock (and concurrent fees to investment banks) may spike with an expected near-term offering of SpaceX shares, as well as efforts to take artificial-intelligence companies OpenAI and Anthropic public.
He said U.S. consumers seemed to be "in pretty good shape," with stable credit quality, even as investors were concerned about private credit.
So even as "you have to build in some risk premium, with inflation and the [Iran conflict possibly] being dragged out ... one can argue that the [IPO and underwriting] pipeline should be converted," Sykes said.
Matt Stucky, the chief portfolio manager at Northwestern Mutual Wealth Management, said that investors would be looking for more clarity next week about banks' exposure to private credit. Nonbank lenders that aren't publicly traded, including some business development companies, have been facing a spike in redemption requests that could be difficult or impossible to meet because there is no liquid market for the loans.
Stucky said that among major banks, there was roughly a 4% exposure within loan portfolios to nondepository financial institutions.
He also said U.S. consumers had been showing resiliency despite the increase in gasoline prices.
When discussing the "higher for longer" scenario with fewer interest-rate cuts by the Fed, Stucky said this would actually be a positive factor for most of the large banks, including Bank of America, which pays next to nothing for checking-account deposits. Reductions in short-term rates were more likely to benefit American Express (AXP) and Capital One Financial (COF), he said.
Ebrahim Poonawala, the head of research for North American banks at BofA Securities, said a reduced number of rate cuts by the Fed would be "generally constructive for the two most asset-sensitive," namely JPMorgan Chase and Wells Fargo. "But it is positive for all the big money-center banks," he said.
An asset-sensitive bank is one for which loans reprice more quickly than deposits. This means that its net interest margin widens when short-term rates rise. A liability-sensitive bank will benefit quickly from a decline in short-term rates, as its cost of funds declines more rapidly than its loans mature and are renewed at lower rates.
In a report on Tuesday, Poonawala predicted that "three C's" would dominate bank executives' earnings calls next week. These are capital-market resiliency, capital deployment and credit quality.
Capital deployment is an important subject for bank-stock investors as banks increase dividends and repurchase stock to reduce share counts and lift earnings per share. This could be a year of extraordinary increases in capital deployment, because the Federal Reserve's board of governors announced on Feb. 4 that the regulator's annual stress tests would be on hold until 2027. The banks will continue to operate under the Fed's mid-2025 capital guidelines.
Poonawala wrote in his Tuesday report that among the banks covered by his team, JPMorgan Chase was best positioned to deploy capital. He called it "a top choice for medium- to longer-term investors."
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April 11, 2026 14:56 ET (18:56 GMT)
MW Here are some bargain bank stocks heading into -2-
He believes Citigroup currently offers "the best risk/reward" among large U.S. banks because of its continuing "self-help" through divestitures under CEO Jane Fraser and its long-term prospects for improving profitability. But he also thinks investors will want to see how hard Fraser "pushes back" against speculation in the media that the bank may be looking to make acquisitions.
An extraordinary bargain among bank stocks
On the list above, Capital One stands out, with its forward P/E declining to 8.9 from 11.6 at the end of 2025. That is the second-lowest forward P/E on the list. Capital One's stock has declined 20% this year. The company completed its acquisition of Brex on Tuesday, bringing in an AI-enabled platform used by issuers of corporate credit cards. When the deal was announced in January, Capital One CEO Richard Fairbanks said Brex had "invented the integrated combination of corporate credit cards, spend management software and banking together in a single platform."
So Capital One is going through a transformation as it integrates Discover, which it acquired in May and which has its own payment-processing system separate from those of Visa (V) and Mastercard $(MA)$, as well as Brex's platform.
Under normal circumstances, Capital One's focus on credit cards would make for a healthy profit profile, because the high net interest margins for card lenders tend to make for high returns on equity, even when higher loan-loss rates are factored in.
Stucky laid out a case for a tremendous increase in value for long-term investors who can commit to Capital One.
The discussion begins with American Express, which can be considered the gold standard for the card industry, with its fees from charge cards, as well as a card lending business leading to very high returns on tangible common equity over the past two years. Return on tangible common equity, or ROTCE, has become a standard measurement of earnings power for banks, with the denominator excluding intangible assets, such as deferred tax assets, loan-servicing rights and goodwill.
American Express's forward P/E has declined to 17.2, down from 21.1 at the end of 2025. "Across financial services this quarter, we have seen some reactions to AI headlines," including stablecoins being "a threat" to payment networks, Sykes said. But he also said: "For us, American Express is also the brand, the trust and an ecosystem of engagement."
Longer term, Sykes expects that American Express will continue to innovate and "be in a position to take advantage of AI trends."
American Express trades at a discount to the S&P 500's SPX forward P/E of 19.4, according to LSEG's data. The S&P 500's average forward P/E over the past five years has been 20.4, according to the data provider.
"Capital One will never be an American Express because [its earnings are] mixed instead of fee-based," according to Stucky. He said that a 25% discount to American Express's P/E would "make sense."
If the S&P 500 were at a P/E of 20, and American Express were to trade at 90% of that level, its forward P/E would be 18. Then, if Capital One were to trade at 75% of American Express's P/E multiple, you would have "a 13.5 multiple for a mid-20s ROTCE business," according to Stucky.
"That is not unreasonable for a business of this quality," he said. And that 13.5 multiple would represent a 52% gain from the current multiple.
But Stucky went further, making a "conservative estimate" that Capital One's earnings per share could increase to $30 in 2030. Right now the consensus 12-month EPS estimate for Capital One is $21.52.
If we applied a 13.5 multiple to EPS of $30, we would have a share price of $405, more than double the stock's closing price of $192.46 on Wednesday.
Sykes said that under the direction of Fairbanks, Capital One has been "a long-term winner." He said that "any chance to take advantage of a Capital One weakness [in the stock price] has us pretty comfortable." Capital One is the 11th largest holding of the Gabelli Financial Services Opportunities ETF.
-Philip van Doorn
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(END) Dow Jones Newswires
April 11, 2026 14:56 ET (18:56 GMT)
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