Is Simmons First National (SFNC) Pricing Reflect Recent Share Rebound And Sector Scrutiny Accurately

• Wondering if Simmons First National is giving you enough value for the risk you are taking, or if the market is mispricing this regional bank right now.
• The stock last closed at US$21.36, with a 12.2% return over the past 30 days and a 13.5% return year to date, while the 1 year return sits at a 0.8% decline and the 5 year return at an 8.5% decline.
• Recent coverage around Simmons First National has focused on how regional banks are being assessed by investors, including scrutiny of balance sheet strength, funding costs, and loan exposure. This broader sector attention helps frame how the market might be thinking about Simmons First National's risk and return profile.
• On our valuation checks, Simmons First National scores 4 out of 6, which you can see broken down in our valuation score. Next, we will walk through the standard valuation tools, then finish with a way to look at value that goes beyond the usual ratios.

Find out why Simmons First National's -0.8% return over the last year is lagging behind its peers.

Approach 1: Simmons First National Excess Returns Analysis

The Excess Returns model looks at how much profit a bank can earn on its equity above the return that shareholders require. For Simmons First National, this framework starts with a Book Value of US$23.18 per share and a Stable EPS estimate of US$2.14 per share, based on weighted future Return on Equity estimates from 6 analysts.

The model assumes an Average Return on Equity of 8.32% and a Stable Book Value of US$25.77 per share, using analyst estimates for future book value. The Cost of Equity is set at US$1.80 per share. This implies an Excess Return of US$0.35 per share, which represents the earnings attributed to shareholders above their required return.

When these excess returns are capitalized in the Excess Returns Model, the estimated intrinsic value is about US$35.45 per share. Compared with the recent share price of US$21.36, this suggests the stock is around 39.7% undervalued based on this approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests Simmons First National is undervalued by 39.7%. Track this in your watchlist or portfolio, or discover 53 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 Simmons First National.

Approach 2: Simmons First National Price vs Book

For banks, the price to book (P/B) ratio is a useful way to think about valuation because book value is closely tied to the value of their loans, securities and deposits. Investors generally pay a higher P/B when they expect stronger growth or see lower risk, and a lower P/B when they are more cautious.

Simmons First National currently trades on a P/B of 0.92x. That sits below the Banks industry average P/B of 1.12x and the peer average of 1.20x. On those simple comparisons, the market is assigning Simmons First National a lower valuation than many similar banks.

Simply Wall St’s Fair Ratio is a proprietary estimate of what a normal P/B might be for Simmons First National, after accounting for factors such as its earnings profile, industry, profit margins, size and identified risks. This tends to be more tailored than just lining the stock up against broad industry or peer averages, which do not adjust for company specific characteristics. In this case, the Fair Ratio is not available, so there is no direct comparison with the current 0.92x P/B to assess whether the shares look overvalued or undervalued on this metric alone.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Simmons First National Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simply your story about Simmons First National linked to your own forecast for revenue, earnings and margins, and then to a Fair Value that you can easily compare with the current share price on Simply Wall St’s Community page. There, millions of investors share their views, update them automatically when new news or earnings arrive, and often land on very different outcomes. For example, one investor may see Simmons First National as worth around the analyst consensus Fair Value of US$22.80, while another, using more cautious assumptions, might land closer to today’s US$20.46 price.

Do you think there's more to the story for Simmons First National? 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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