Ronald I. Mandle's approach to the money-center banks he covers for Sanford C. Bernstein & Co. is deceptively simple: he looks at their earnings power.
One of the best known bulls among banking analysts, he sees a strong recovery for his universe of the nation's biggest banks. For one thing, Mr. Mandle expects money-center earnings to rise in 1995 as their derivatives trading activities recover.
He says the recovery won't bring back the spectacular profits posted by most trading banks in 1993.
It will, however, be a welcome change from the dismal performance turned in by the trading banks during much of 1994.
In general, Mr. Mandle predicts bank stock prices will grow 10% overall in 1995, marginally better than the 6% rise forecast in the S&P 500.
Mr. Mandle, a past president of the Bank and Financial Analysts Association, said he tries to identify discrepancies between a bank's stock price and its business prospects, an indication of which way the stock price will move. "The best stocks are not always from the best companies," he said.
That approach is particularly useful in covering a group as diverse as J.P. Morgan & Co., Citicorp and Chemical Banking Corp.
One institutional investor said that while dozens of analysts rightly predicted a slump in trading revenues at the big banks, they say Mr. Mandle was aggressive in understanding the impact on the banks' clients.
"He seemed to know early on why it was going to be a bad year," the source said.
