Is Crédit Agricole (ENXTPA:ACA) Still Reasonably Priced After Its 38.5% One Year Rally?

• If you are wondering whether Crédit Agricole at €17.32 is still reasonably priced after a strong run, this article will help you put that question into context.
• The share price has seen a 38.5% return over the past year and a very large gain over five years, while the recent 1.3% decline over 7 days and 2.6% drop year to date suggest sentiment has been more mixed in the short term.
• Recent headlines around large European banks have focused on capital strength, regulatory developments and how lenders are positioning themselves as rates and credit conditions evolve. For Crédit Agricole, that broader sector backdrop helps frame how investors are thinking about the balance between earnings power and potential risks at the moment.
• Simply Wall St's valuation checks give Crédit Agricole a score of 4 out of 6. In this article, we will unpack that assessment using different valuation approaches, then finish with a way to look at value that ties the numbers together more clearly for long-term investors.

Find out why Crédit Agricole's 38.5% return over the last year is lagging behind its peers.

Approach 1: Crédit Agricole Excess Returns Analysis

The Excess Returns model asks a simple question: after paying shareholders a fair return for the risk they take, how much value does the bank create on top of its equity base?

For Crédit Agricole, the model uses a Book Value of €25.49 per share and a Stable EPS of €2.46 per share, based on weighted future Return on Equity estimates from 9 analysts. The Average Return on Equity is 9.46%, while the Cost of Equity is €3.20 per share, which leads to an Excess Return of €0.74 per share. The Stable Book Value input is €26.02 per share, based on estimates from 10 analysts.

Putting these together, the Excess Returns model points to an intrinsic value of about €18.76 per share, compared with the current share price of €17.32. That implies roughly a 7.7% discount, so the share price and this model’s estimate are fairly close.

Result: ABOUT RIGHT

Crédit Agricole is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Crédit Agricole.

Approach 2: Crédit Agricole Price vs Earnings

For a profitable bank, the P/E ratio is a straightforward way to see what you are paying for each euro of earnings. It is widely used because it links directly to the bottom line that ultimately supports dividends and retained capital.

In simple terms, higher expected earnings growth and lower perceived risk tend to support a higher P/E, while slower expected growth or higher risk usually point to a lower, more cautious multiple. The question is what looks like a reasonable P/E range for Crédit Agricole today.

Crédit Agricole currently trades on a P/E of 7.20x, compared with an industry average of 11.00x for Banks and a peer group average of 12.17x. Simply Wall St’s Fair Ratio for the stock is 7.80x, which reflects a proprietary view of what the P/E could be given factors such as earnings growth, profit margin, industry, market cap and company specific risks.

That Fair Ratio is often more useful than a simple peer or industry comparison because it adjusts for those fundamentals rather than assuming all banks deserve the same multiple. With the Fair Ratio at 7.80x and the actual P/E at 7.20x, the shares screen as undervalued on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Crédit Agricole Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your story about Crédit Agricole tied to your own numbers for future revenue, earnings, margins and fair value. All of this is brought together in an easy tool on Simply Wall St’s Community page that compares your Fair Value to the current price and keeps updating when new news or earnings arrive. One investor might build a more optimistic Crédit Agricole Narrative around revenue of about €29.8b, earnings of €7.6b by 2028 and a fair value closer to the high analyst target of €21.0. Another might focus on the risks and anchor their Narrative near the low target of €14.5. Yet both are using the same framework of story, forecast and value to decide whether the current price looks high, low or about right for them.

Do you think there's more to the story for Crédit Agricole? Head over to our Community to see what others are saying!

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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