Eric Compton: On Tuesday, three of the big four U.S. banks reported earnings, giving us greater insight into the overall health of the U.S. banking industry. While many are worried about an imminent recession, slowing global growth, and a flattening yield curve, underlying bank operating performances remained strong, which fits broadly within our current thesis on the space.
To start 2018, we were largely bearish on the banks, as most names were trading at 2 or 3 stars as we felt valuations were too optimistic. That has now switched with many names trading at 4 stars, as prices have become more pessimistic. We continue to think banks are an interesting place to look given the sentiment currently baked into valuations.
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Eric Compton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.