A Look At TriCo Bancshares (TCBK) Valuation After ESOP Shelf Registration Filing

TriCo Bancshares (TCBK) has filed a shelf registration for up to 1,200,000 shares of common stock, totaling about $56.892 million, linked to an employee stock ownership plan that could influence future capital planning.

See our latest analysis for TriCo Bancshares.

At a share price of $47.09, TriCo Bancshares has seen modest short term share price softness. Its 1 year total shareholder return of 21.54% suggests longer term momentum has been stronger, with the ESOP related shelf registration adding a fresh talking point around future capital needs.

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With TriCo Bancshares trading at $47.09, sitting at a discount to the average analyst price target and an indicated intrinsic value estimate, investors now face a key question: is there genuine upside left or is the market already banking on future growth?

Price-to-Earnings of 12.5x: Is it justified?

On a P/E of 12.5x, TriCo Bancshares trades a little richer than the wider US banks group, even though its $47.09 share price still sits below some valuation markers investors often watch.

The P/E ratio compares the share price with earnings per share and is a common yardstick for banks where steady profitability is a key focus. For TriCo Bancshares, earnings have grown by 4.3% per year over the past 5 years, with last year's 5.8% growth sitting slightly ahead of that trend and net profit margins currently around 30%. This points to robust profitability on existing business rather than a high growth profile.

Compared with the US Banks industry average P/E of 11.1x, TriCo Bancshares trades at a higher multiple. It also sits above an estimated "fair" P/E of 10.9x that some investors may use as a reference point for where the market could eventually settle. At the same time, its P/E is close to the peer group average of 12.7x, which suggests the premium is not extreme and may reflect the combination of high quality earnings, consistent profit growth and a reliable 3.06% dividend yield.

Explore the SWS fair ratio for TriCo Bancshares

Result: Price-to-Earnings of 12.5x (OVERVALUED)

However, you should keep an eye on how the ESOP share issuance and any shift in credit quality or loan demand could pressure earnings and justify a lower P/E ratio.

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

Another View: Cash Flows Point to Undervaluation

The P/E of 12.5x suggests TriCo Bancshares is priced a bit rich, but the SWS DCF model points in the opposite direction. On that view, the shares at $47.09 sit about 37.9% below an estimated fair value of $75.87, which frames the current price as a potential discount rather than a premium.

For anyone weighing these two signals, the real question is which matters more for you: today's earnings multiple, or the longer term cash flow picture that our DCF model is built on.

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 62 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed signals here leave you with questions, that is a good thing. It means it is time to look at the numbers directly, weigh the positives, and decide where you stand with the help of the 4 key rewards.

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If you stop with just one stock, you could miss opportunities that better fit your goals, so consider putting a few strong contenders on your radar today.

• Target potential mispricing by scanning companies that look attractively valued with the 62 high quality undervalued stocks.
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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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