KeyCorp (KEY) Reports Higher Charge Offs, Is It Still Below Fair Value?

Why KeyCorp’s latest credit metrics matter for stock investors

KeyCorp (KEY) recently reported second quarter net loan charge offs of $115 million compared with $102 million a year earlier, giving investors fresh information on credit costs and loan performance across the bank’s portfolio.

See our latest analysis for KeyCorp.

The recent uptick in net loan charge offs and the reaffirmed common and preferred dividends come at a time when KeyCorp’s share price is US$22.65. Short term momentum has softened; however, a 1 year total shareholder return of 27.13% and a 3 year total shareholder return above 100% point to a much stronger longer term picture.

If you are assessing how changing credit trends at KeyCorp fit into a broader portfolio, this is a good moment to widen your research radar and review 35 power grid technology and infrastructure stocks

For KeyCorp, recent credit costs, dividend decisions, and a softer one month share move all sit in front of a strong multi year return record. The key question is whether this reflects a shift in business fundamentals or simply a reset in sentiment.

Most Popular Narrative: 10.2% Undervalued

The most followed narrative for KeyCorp compares a fair value of $25.22 with the recent close at $22.65, framing the bank as trading at a discount that hinges on how its loan mix, deposits, and fee income evolve.

The anticipated shift from net interest income (NII) headwinds to tailwinds due to a pivot in fixed asset repricing and the structure of swap and treasury maturities, expected to significantly enhance NII in the forthcoming quarters, impacting revenue growth positively.

Read the complete narrative.

Want to see what sits behind that NII inflection for KeyCorp? The narrative leans on a specific blend of loan growth, margin resilience, and long term earnings power. Curious which revenue and profit assumptions are critical to justifying that fair value and how sensitive they are to small changes in growth or multiples?

Result: Fair Value of $25.22 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there is still the risk that weaker loan demand or a rise in nonperforming loans at KeyCorp could pressure net interest income, margins, and capital flexibility.

Find out about the key risks to this KeyCorp narrative.

Next Steps

Given the mix of optimism and concern around KeyCorp right now, this is a good time to look through the numbers yourself, compare the positives and negatives, and weigh up whether the current story makes sense for you using 4 key rewards and 1 important warning sign

Looking for more investment ideas beyond KeyCorp?

If KeyCorp has your attention, do not stop there. Broadening your watchlist with other focused ideas can help you spot opportunities you would otherwise miss.

• Scan for potential income anchors by reviewing companies in the 9 dividend fortresses that may offer robust yield profiles supported by their underlying fundamentals.
• Hunt for value by checking the 49 high quality undervalued stocks where strong cash flows and balance sheets intersect with prices that may not fully reflect those strengths.
• Zero in on resilience by using the 79 resilient stocks with low risk scores to find stocks that score well on financial strength and business stability.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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