For the past two weeks I have decided to take a break from our normal analysis to take a look at some other parts of the market, but that will not continue. For this week’s post, we will be returning to our normal weekly analysis of a randomly selected company and analyzing them in two different ways.
However, we won’t be straying too far from our post last week as I will be choosing to analyze one of the banks that were involved in the banking crisis, First Republic Bank (FRC). First Republic Bank was founded in 1985 and is currently headquartered in San Francisco. They have spent a lot of the recent weeks in the news as they are in some turmoil as the fear of them going under began to surface. They avoided complete catastrophe, like the rest of the market, and have seen some rebound since.
We will begin as always with Firm Foundation. As a refresher, Firm Foundation is an analytical analysis in which we look at three different statistics, the Price to Earnings Ratio, the Price to Dividends Multiple, and the Yield. The P/E ratio for First Republic Bank is currently quite low, sitting at 2.63, far below the historic average of 14. The reason why I chose this company was not due to their strong Firm Foundation, but more due to their interesting drop in price and their connection to the recent banking crisis. With that in mind, First Republic Bank does not currently have a PD Multiple or a yield.
Now we move onto a more conceptual way of analysis, Castle in the Air. Castle in the Air is built on finding patterns in the graph of the company and making predictions based on historic trends. The graph for First Republic Bank is an interesting one to say the least. Not even a month ago the stock was trading at a price north of $120, in contrast to it sitting now at below $13. Like I stated above, this was less about analyzing the company and more above bringing light to an unusual situation. There are hints of trend lines forming, but given its recent past, I wouldn’t put too much weight into them.
I am going to be honest and say that I don’t know what to make of a company that is in this state. They have recently seen an event that nearly shut them down and saw their stock price fall by over 75%. All of that being said they are still open for business. There is a possibility that they can return to their old price and put all of this behind them, which would be a great opportunity to make profit, or they could simply keep going down. I believe that the latter is more likely, but they have had a few good days since the fall.
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