Is It Time To Reassess Pathward Financial (CASH) After Recent Share Price Strength?

• If you are wondering whether Pathward Financial's current share price still offers value, it helps to first see how its market price lines up with what the business might be worth.
• The stock last closed at US$89.59, with returns of 21.8% over the past month, 24.7% year to date and 14.0% over the last year, which can change how investors think about both upside and risk.
• Recent news coverage has focused on Pathward Financial's position in the U.S. banking sector and how its business model fits within a regulated financial system. This context often shapes market expectations and can influence how comfortably investors view the recent price moves.
• Using Simply Wall St's valuation checks, Pathward Financial currently has a valuation score of 5/6. We will unpack this using different valuation methods next, and then return to a broader way of thinking about what those numbers might mean for you.

Find out why Pathward Financial's 14.0% return over the last year is lagging behind its peers.

Approach 1: Pathward Financial Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders typically require, then capitalizes those excess profits into an estimated value per share.

For Pathward Financial, the model uses a Book Value of US$38.55 per share and a Stable EPS estimate of US$10.94 per share, based on the median return on equity from the past 5 years. The Average Return on Equity is 23.76%, while the Cost of Equity is estimated at US$3.70 per share. That leaves an Excess Return of US$7.23 per share, which is what the model treats as value created beyond investors’ required return.

The Stable Book Value is projected at US$46.03 per share, sourced from weighted future Book Value estimates from 2 analysts. Combining these inputs, Simply Wall St’s Excess Returns model arrives at an intrinsic value of about US$202.02 per share. Compared with the recent share price of US$89.59, this implies the stock is 55.7% undervalued under this approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests Pathward Financial is undervalued by 55.7%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

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

Approach 2: Pathward Financial Price vs Earnings

For a profitable company like Pathward Financial, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It gives a simple link between the share price and the business’s current earnings power, which is usually a key driver of how investors value established banks.

What counts as a “normal” or “fair” P/E often reflects how the market views a company’s growth prospects and risk profile. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk can pull that multiple down.

Pathward Financial currently trades on a P/E of 10.24x, compared with the Banks industry average of 11.83x and a peer average of 16.81x. Simply Wall St’s Fair Ratio for the stock is 10.84x. This is its proprietary estimate of an appropriate P/E once factors such as earnings growth, profit margin, industry, market cap and risks are considered. This tailored Fair Ratio can be more useful than a simple industry or peer comparison because it adjusts for the company’s own characteristics rather than assuming all banks deserve the same multiple. With the current P/E of 10.24x sitting slightly below the Fair Ratio of 10.84x, the shares screen as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Pathward Financial Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach your story about Pathward Financial to the numbers by linking your view on its future revenue, earnings, margins and fair value to a clear forecast, then comparing that Fair Value with today’s price. All of this is available within an easy tool on the Community page that updates when fresh news or earnings arrive. One investor might build a more optimistic Pathward Financial Narrative anchored around a Fair Value of US$100 per share, while another might focus on risks and pick a lower figure, and both can quickly see how their own assumptions line up with the current market price.

Do you think there's more to the story for Pathward Financial? 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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