Weighing price vs. value

When it comes to bank stocks (or any stocks for that matter) it's important to distinguish between price and value. Image source: iStock/Thinkstock.

Click here to learn about two bank stocks you may be overlooking.

If you're an investor with an interest in the bank industry, then there are certain stocks that should be on your radar. Ten that come immediately to mind are the eight global systemically important banks together with two of the largest regional banks, U.S. Bancorp (NYSE:USB) and Capital One Financial (NYSE:COF).

But whether you can afford to buy any of these stocks depends in part on their share prices. With this in mind, here's a list of these 10 popular bank stocks ranked by share price.


Share Price

Price-to-Tangible Book Value

Goldman Sachs



Capital One Financial



JPMorgan Chase



State Street






Wells Fargo



US Bancorp



Bank of New York Mellon



Morgan Stanley



Bank of America



Data source: YCharts.com.

A variety of options

There's a wide range of bank stocks \ both in terms of their respective share prices and their business models.

The standalone investment bank Goldman Sachs (NYSE:GS) tops the list, with a share price of $241. That's more than double the runner-up, credit card specialist Capital One Financial, with its shares selling for $90 each.

On the other end of the spectrum is the nation's second largest commercial bank, Bank of America (NYSE:BAC), which has the least expensive stock by far within its peer group. Its shares trade for less than $23 a unit, which is roughly half that of the next cheapest bank stock, investment bank Morgan Stanley (NYSE:MS), which trades for around $43 a share.

Price vs. value

It's important to point out that a stock's price should play a smaller role in an investor's decision about whether to invest in it than valuation should. That's why I included the third column, showing these banks' price-to-tangible-book-value ratios. This is really what dictates whether a particular bank's stock is cheap or expensive.

It's by looking at this that you can see why Goldman Sachs' stock isn't as expensive as its share price would otherwise lead you to believe. Based on its valuation, in fact, Goldman Sachs is ranked fifth after Citigroup, Capital One, Bank of America, and Morgan Stanley.

On the other end of the spectrum are banks such as Bank of New York Mellon, U.S. Bancorp, and State Street, which trade near or above three times their respective tangible book values.

Why are these three banks so expensive?

In U.S. Bancorp's case, a regional lender based in Minneapolis, it's the most profitable big bank in the country, run by some of the best in the business. And in Bank of New York Mellon and State Street's cases, both of which operate custodial banks (here are the five different types of banks you can invest in), their unique business models insulate them from the same degree of risk that most other banks face.

The point is, if you're looking to invest in a bank today, you need to look beyond its share price and consider not only its value, but also what it brings to the table in terms of its business model.