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Are Banks Bargains?

Many banks reported good third-quarter earnings and upbeat outlooks. We check them against Morningstar analysts' expectations.

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The average stock in our global coverage universe is about fairly valued, according to the Morningstar Market Fair Value chart. While that means bargains likely are not lining the shelves, with a little digging you can uncover some underpriced stocks with good prospects.

One of the cheapest sectors in our coverage area is financial services. Although it's certainly not a closeout sale, the typical stock in the sector is 7% undervalued, trading at a market-cap-weighted price/fair value ratio of 0.93. And one particularly undervalued industry within that sector is banks.

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Karen Wallace does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.