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KeyCorp KEY

Morningstar Rating
$14.26 −0.09 (0.63%)
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Company Report

NYCB Was Uniquely Risky; We Would Not Read Too Much Into the Entire Banking Sector

Our thesis on the U.S. banks following the Silicon Bank fallout was that all of the banks we covered, except for First Republic (which we downgraded to a $3 fair value estimate on March 20, 2023, and a $0 fair value on April 27, 2023), would be able to weather the storm. We believed that banks in trouble were in uniquely risky positions. We believe this thesis has largely held up, and sorting through banks based on their unique risk profiles remains necessary and valuable. To the extent that the market is selling off all banks because of what has happened to NYCB, we think there could be opportunities once again while acknowledging the significant time horizon risk (how long does it take for the banks to prove to the market they are fine) and the choppy waters that could occur in the meantime (we expect more commercial real estate related loan losses in the future).

Price vs Fair Value

KEY is trading at a 29% discount.
Price
$14.26
Fair Value
$34.00
Uncertainty
High
1-Star Price
$43.00
5-Star Price
$57.00
Economic Moat
Plhz
Capital Allocation
Dzhrbms

Bulls Say, Bears Say

Bulls

KeyCorp's valuation is not demanding. As long as the bank can avoid a dilutive capital raise or some other complete disaster, there should be upside in the name.

Bears

There are few positive catalysts left for the banks. Funding costs are running higher, net interest income has likely peaked, higher regulatory scrutiny is likely, and a potential recession may be around the corner.

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News

Trading Information

Previous Close Price
$14.35
Day Range
$14.2114.42
52-Week Range
$8.5418.56
Bid/Ask
$13.98 / $14.14
Market Cap
$13.36 Bil
Volume/Avg
323 / 17.2 Mil

Key Statistics

Price/Earnings (Normalized)
11.18
Price/Sales
2.08
Dividend Yield (Trailing)
5.75%
Dividend Yield (Forward)
5.75%
Total Yield
6.03%

Company Profile

With assets of over $170 billion, Ohio-based KeyCorp's bank footprint spans 16 states, but it is predominantly concentrated in its two largest markets: Ohio and New York. KeyCorp is primarily focused on serving middle-market commercial clients through a hybrid community/corporate bank model.
Sector
Financial Services
Industry
Banks - Regional
Stock Style Box
Mid Value
Total Number of Employees
17,333

Competitors

Valuation

Metric
KEY
WFC
FITB
Price/Earnings (Normalized)
11.188.979.31
Price/Book Value
1.071.051.34
Price/Sales
2.082.192.67
Price/Cash Flow
3.496.534.58
Price/Earnings
KEY
WFC
FITB

Financial Strength

Metric
KEY
WFC
FITB
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
KEY
WFC
FITB
Return on Assets (Normalized)
0.92%1.04%1.29%
Return on Equity (Normalized)
15.45%12.17%17.65%
Return on Invested Capital (Normalized)
Return on Assets
KEY
WFC
FITB
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Banks - Regional Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
BNPQY
BNP Paribas ADRRwrkq$70.0 Bil
USB
U.S. BancorpSyhw$64.4 Bil
ITUB
Itau Unibanco Holding SA ADRPcnl$62.9 Bil
PNC
PNC Financial Services Group IncQcvmrb$58.1 Bil
ISNPY
Intesa Sanpaolo ADRQbx$58.1 Bil
TFC
Truist Financial CorpLppjbwc$47.0 Bil
MFG
Mizuho Financial Group Inc ADRNkymq$46.2 Bil
LYG
Lloyds Banking Group PLC ADRTmmkc$36.9 Bil
BBD
Bank Bradesco SA ADRWbqz$28.1 Bil
DB
Deutsche Bank AGJgwn$26.9 Bil

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