Bank stocks stink, so time to buy banks?

Traders work the floor of the New York Stock Exchange.
Adam Jeffery | CNBC

A funny thing has been happening to financials: while earnings have been stellar, their stocks have stunk.

Broadly speaking, financial industry companies on the are expected to post first-quarter earnings gains of 15.8 percent, easily outdistancing other sector competitors on the broad market index. If profits are the primary drivers of prices, you'd then expect their stocks to be blooming.

That has not been the case.

Financials, in fact, are the second-worst performing group of the 10 S&P sectors, registering a loss of 2.3 percent heading into Tuesday's trading. Only utilities, which have tumbled 5.6 percent, have fallen further.

The results are even worse drilling down into bank stocks specifically.

Banks as a whole are off 3.4 percent, even though Keefe, Bruyette & Woods reports that 54 percent have beaten consensus profit estimates. Consumer finance stocks have dropped 11.3 percent. Thrifts and mortgage finance institutions have slid 4.5 percent, while real estate-related institutions have been one of the few outperforming groups.