TriCo Bancshares (TCBK): Assessing Valuation After Recent Share Price Gains

Recent performance and valuation backdrop

TriCo Bancshares (TCBK) has quietly ground higher, with the stock up about 7% over the past month and 5% over the past 3 months, even after a small dip in the latest session.

See our latest analysis for TriCo Bancshares.

Zooming out, that 6.5% 1 month share price return and roughly 11% year to date gain suggest steady, if unspectacular, momentum as investors gradually price in TriCo Bancshares consistent growth and generally solid credit profile.

If you are weighing where to put fresh capital next, this could be a good moment to explore fast growing stocks with high insider ownership and see which other names are building similar momentum.

With shares trading just below analyst targets and at a hefty discount to some intrinsic value estimates, the key question now is whether TriCo Bancshares remains mispriced, or if the market is already baking in its next leg of growth?

Price-to-Earnings of 13.3x: Is it justified?

Based on the latest figures, TriCo Bancshares trades on a price-to-earnings ratio of 13.3 times earnings, a level that leaves the stock looking relatively expensive against both its banking peers and its recent share price performance.

The price-to-earnings multiple compares the current share price with the company’s per share earnings, so it captures how much investors are willing to pay today for each dollar of current profit. For a mature regional bank like TriCo Bancshares, this ratio is a key yardstick because earnings tend to be relatively stable and are a primary driver of both dividend capacity and long term capital returns.

In TriCo Bancshares case, the market is assigning a richer multiple than both the peer group and what our valuation work suggests is appropriate. The stock changes hands at 13.3 times earnings compared to a US banks industry average of 11.6 times and a peer average of 12.3 times, and it also sits well above the estimated fair price to earnings ratio of 10.9 times that our models indicate the market could ultimately gravitate toward if expectations cool or sector sentiment normalises.

Explore the SWS fair ratio for TriCo Bancshares

Result: Price-to-Earnings of 13.3x (OVERVALUED)

However, rising funding costs or a sharper than expected credit downturn could quickly compress margins and force the market to reassess TriCo’s premium valuation.

Find out about the key risks to this TriCo Bancshares narrative.

Another view from our DCF model

While the price to earnings ratio paints TriCo Bancshares as somewhat expensive, our DCF model points the other way, suggesting fair value closer to 70.97 dollars, about 33% above today’s 47.82 dollars. Is the market missing something in the cash flow story, or is the model too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TriCo Bancshares for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own TriCo Bancshares Narrative

If you see the story differently or want to dig into the numbers yourself, you can craft a personalised view in just minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding TriCo Bancshares.

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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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