Analyzing bank stocks can be complicated, but it doesn't have to be. If you dig into the levers that dictate a bank's performance, you'll find that there are less than a dozen metrics that explain nearly everything a potential investor needs to know before deciding whether to buy a particular bank stock or not.
What are these metrics? To make it easy for you, I narrowed the list down to 10 and incorporated them into the simple and attractive slideshow that's located at the bottom of this article. I encourage you to keep the slideshow handy if you're an avid bank stock investor. After mastering these 10 metrics, there's little reason to believe that you won't be able to identify the bank stocks best positioned to outperform their peers.
Take Capital One (NYSE:COF), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) as examples. Capital One's greatest strength is its high-yielding portfolio of credit card loans. This is communicated via its net interest margin and non-performing loans ratios, both of which are covered in the slideshow. In Wells Fargo's case, its efficiency ratio takes center stage in any explanation of its success. This pivotal metric is discussed on the fifth slide. And Citigroup offers investors the opportunity to get in on a mighty financial conglomerate at a steep discount to its book value per share -- another variable hashed out below.
In short, I encourage you to scroll through the following slideshow. Because so few investors have a commanding grasp of these metrics, your familiarity with them will give you an immediate leg up in the competition to outperform the market.
John Maxfield has no position in any stocks mentioned. The Motley Fool owns and recommends Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.