It wasn't a good start to the week for Bendigo and Adelaide Bank Ltd (ASX: BEN) shares.
The company's share price slumped 5.17% as ASX bank shares were hammered in Monday's trade. The Aussie banks led the S&P/ASX 200 Index (ASX: XJO) 0.5% lower to close at 6,001.60 points.
But is the Aussie bank cheap after yesterday's slump or does it have further to fall in 2020?
Why Bendigo and Adelaide Bank shares fell yesterday
The big factor in Monday's trading sessions was, you guessed it, coronavirus concerns.
An increase in cases across Victoria and New South Wales once again spooked investors. There are increasing talks of tighter restrictions that could hurt Australia's economic rebound.
The banks are exposed to a deteriorating economy. This could be through more home, personal and business loan defaults and lower earnings.
That sent investors heading for the exits with Bendigo and Adelaide Bank shares closing down 5.17% on Monday.
Is the ASX bank a cheap buy?
I think the best way to evaluate Bendigo and Adelaide Bank shares is by benchmarking them against their peers.
Bendigo is the largest Australian retail bank outside of the big four. That means banks like Commonwealth Bank of Australia (ASX: CBA) or National Australia Bank Ltd (ASX: NAB) might be a reasonable benchmark.
Commonwealth Bank shares trade at a price to earnings (P/E) ratio of 13.1 while NAB shares trade at 16.0. However, Bendigo and Adelaide Bank shares have them both beaten with a P/E of just 11.5.
That could mean that the Aussie bank is a good relative buy versus its peers. Unfortunately for us keen-eyed Fools, it's not that simple.
For one, P/E ratios and dividend yields are a bit unreliable right now. No one knows just how different the next period's earnings will be from the last period due to the pandemic.
It's also arguable that Bendigo is in a worse position compared to the big four. Bendigo is a smaller bank and has heavy regional exposure. That could mean more defaults in hard-hit regions and difficulty to compete on pricing with the majors.
On the other hand, Bendigo is looking towards the long-term. The Aussie bank owns neobank Up which leaves it well-placed for any potential shift in the banking sector.
Foolish takeaway
ASX bank shares like Bendigo and Adelaide Bank are hard to value right now. I think it's too uncertain to be buying in for a marginally lower P/E ratio under the current conditions.
Personally, I would be waiting until the bank's August earnings result for a better idea of whether to buy or not.
