If you’re deciding what to do with Independent Bank stock right now, you’re not alone. With the markets swinging, there’s a lot of chatter around whether recent moves represent opportunity or risk. Since the start of the year, Independent Bank’s stock has gained 10.5%, and over the past 12 months, it’s up 14.8%, outpacing many regional banking peers. Still, the last month brought a slight 2.0% dip, with last week’s close at $69.84. This hints that investors are pausing to catch their breath after an impressive longer-term run of 58.5% over five years. There hasn’t been a single news event behind these moves, but generally shifting perceptions about bank sector risk and market appetite for financial stocks have played a part.
Of course, strong returns always raise the question: is the stock still undervalued, or are the best days behind? By our count, Independent Bank comes out with a valuation score of 3, meaning it passes half of the six checks for being undervalued. That lands it right in the middle, setting up an interesting case for a deeper dive.
Let’s break down those six key valuation checks to see where the bank shines and where it falls short. After we look at traditional valuation metrics, we’ll explore an even more insightful way to understand the real worth of Independent Bank stock.
Why Independent Bank is lagging behind its peers
The Excess Returns valuation model helps investors determine whether a bank’s stock is attractive by examining how much it earns above its cost of equity. Essentially, it measures Independent Bank’s ability to deliver returns above what investors demand for the risks they take on owning the stock.
For Independent Bank, the numbers break down as follows:
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Book Value: $72.13 per share
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Stable Earnings Per Share (EPS): $5.54 per share
(Source: Median Return on Equity from the past 5 years.) -
Cost of Equity: $5.04 per share
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Excess Return: $0.49 per share
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Average Return on Equity: 7.44%
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Stable Book Value: $74.44 per share
(Source: Weighted future Book Value estimates from 2 analysts.)
By these measures, Independent Bank generates a modest but positive excess return, indicating it is generating more for shareholders than its cost of equity. According to this model, the stock’s estimated intrinsic value is $87.77 per share. This is 20.4% above the recent price of $69.84, which suggests the shares are undervalued at current levels.
Result: UNDERVALUED
