Simmons First National (SFNC) Could Be 6% Undervalued As Earnings And Buybacks Land
Simmons First National (SFNC) is back in focus after its latest quarterly update, reporting higher net interest income, increased net income and the completion of a US$15.06 million share repurchase program.
See our latest analysis for Simmons First National.
The latest earnings and share repurchase appear to have supported sentiment around Simmons First National, with the stock now at US$23.48 and a 90 day share price return of 10.49%, while the 3 year total shareholder return of 34.50% shows momentum has been building rather than fading.
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Bulls point to Simmons First National’s stronger recent earnings and buybacks, while bears focus on past losses and credit costs. Given the latest move in the stock, which side does the current valuation appear to support?
Most Popular Narrative: 5.5% Undervalued
The most followed narrative currently places Simmons First National’s fair value at about $24.86, modestly above the last close of $23.48. This frames the stock as slightly undervalued and puts the focus squarely on the company’s long term earnings power.
Analysts expect earnings to reach $1.5 billion (and earnings per share of $10.51) by about July 2029, up from $349.5 million loss today. In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 2.9x on those 2029 earnings, up from 9.5x loss today.
The fair value story for Simmons First National leans heavily on a sharp swing from current losses to sizeable earnings, together with much higher revenue and profit margins. Curious which specific growth, margin and valuation assumptions sit underneath that view and how they combine into that fair value figure? The full narrative lays out those building blocks step by step.
Result: Fair Value of $24.86 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Simmons First National still faces pressure from competitive loan pricing and commercial real estate credit risk, either of which could challenge the optimistic earnings narrative.
Find out about the key risks to this Simmons First National narrative.
Next Steps
With both risks and rewards in play around Simmons First National, it makes sense to move quickly and test the narrative against hard numbers yourself. To see the full balance of potential upside and downside, take a closer look at the 2 key rewards and 1 important warning sign.
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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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