Coastal Financial (CCB) Valuation Check As Shares Cool And P/E Diverges From Cash Flow Signals

Why Coastal Financial Is On Investors’ Radar Today

With no single headline catalyst driving attention, Coastal Financial (CCB) is drawing interest as investors weigh its recent share performance, current profitability, and valuation signals in light of its traditional banking operations and its Banking as a Service footprint.

See our latest analysis for Coastal Financial.

Recent trading has been choppy, with a 1 day share price return of about a 5% decline at US$95.78 and a 30 day share price return of roughly a 15% decline. The 5 year total shareholder return is around 4.4x, suggesting long term holders have still seen substantial gains while short term momentum has cooled.

If Coastal Financial’s moves have you reviewing bank exposures, it could be a good moment to broaden your watchlist with fast growing stocks with high insider ownership.

Coastal’s share price has cooled with a 15% 30-day decline, even as annual revenue and net income growth sit near 31% and 45%, and some valuation models point to a discount. Is this a potential entry point, or is the market already baking in future growth?

Preferred P/E of 30.4x: Is it justified?

Coastal Financial shares last closed at $95.78 and are trading on a P/E of 30.4x, which screens as expensive compared with both peers and the wider US banks group.

The P/E ratio compares the current share price with the company’s earnings per share and is a common way investors gauge how much they are paying for each dollar of profit, especially for profitable banks with a growth footprint such as Coastal’s mix of traditional lending and Banking as a Service.

Here, the market is paying a much richer multiple than for many other US banks. This suggests investors are pricing in stronger profit growth than the sector and a premium business model, even though Coastal’s current Return on Equity is described as low at 10% and its net profit margin is lower than last year.

Against the US Banks industry average P/E of 11.8x and a peer average of 14.2x, Coastal’s 30.4x stands out as substantially higher. It is also above an estimated fair P/E of 21.3x that some models suggest the market could move closer to if sentiment or growth expectations change.

Explore the SWS fair ratio for Coastal Financial

Result: Price-to-Earnings of 30.4x (OVERVALUED)

However, you also have to weigh risks such as a sharp reset in high P/E bank valuations or setbacks in Coastal’s Banking as a Service relationships and growth plans.

Find out about the key risks to this Coastal Financial narrative.

Another View: Cash Flows Tell a Different Story

While the 30.4x P/E makes Coastal Financial look expensive next to US banks and peers, our DCF model points the other way. At $95.78, the shares trade about 45.5% below an estimated future cash flow value of $175.68, which suggests the market could be underpricing long term cash generation. Which signal do you trust more right now?

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 Coastal Financial 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 874 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 Coastal Financial Narrative

If you see the numbers differently or prefer to weigh the data on your own terms, you can build a custom view in just a few minutes with Do it your way.

A great starting point for your Coastal Financial research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Ready for more investment ideas?

If Coastal Financial has your attention, do not stop here. Broaden your opportunity set now so you are not relying on a single story.

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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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