Bank Stock Equity Valuation different, knowledge, operation, situation, anybody

spartanag07

Hello All I have two questions
Using CFA level  knowledge, I tried to calculate bank stock intrinsic value.
First, There three kinds of incomes (Net Income, Comprehensive Income, Net Income from continuing operation)  on  income statement. Does anybody know which income should I take in order to calcualte the intrinsic value?
Second, I think beta can be different depend on calculation periods, market situation (bullish, bearish).
Am I right? If so how can I calculate the correct beta?
Some internet sites shows different betas for same stock.
Thank you
JY

scr879

Bank valuation is a different animal.  Banks trade at multiples to Book and Tangible Book, and the value of that premium/discount is often a function of things like regulatory capital, market demographics and capital structure.
My advice would be don’t get caught trying to treat a bank like an industrial.  At this point in the cycle, earnings still mean less than book value.  Growth premiums come from those banks which are able to organically grow commercial loans.  Regarding your question on income, all three can be relevant and the most relevant depends on company structure. The comprehensive income for banks takes their AFS portfolios into account – it they are still having issues with marking Trust Preferreds, for example, that will show up in OCI.

joemoran

Bank valuation is a fairly specialized field.  I have not read the paper linked above, but anything from Damodaran is typically gold.

pogo

Beta absolutely depends on calculation periods… compare a one year beta with a two year beta on the same stock.  Heck, compare a two year beta using weekly calculations with a two year beta using monthly calculations, you’ll get different results depnding on the period.

cyber21

beta = lol