Old National Bancorp (ONB) Could Be 50% Below Fair Value Following 1834 Leadership Changes

Old National Bancorp (ONB) has been in focus after appointing Katie Florig as President and Tom Weizenegger as Chief Investment Officer of its 1834 wealth division, reshaping leadership around its advisory and trust operations.

Old National Bancorp’s recent leadership changes at 1834 come at a time when the share price has eased 5.24% over the past 30 days, while still showing a 13.79% year-to-date share price return and a 16.00% total shareholder return over one year. The 84.41% three-year total shareholder return points to momentum that has built over a longer horizon, even as shorter-term moves cool around the current US$25.66 level.

Scan beyond Old National Bancorp and compare its recent leadership-driven story with a curated set of financially solid peers through our list of solid balance sheet and fundamentals (23 results).

Old National Bancorp’s recent slide sits against years of strong shareholder returns and fresh leadership at 1834, which raises a simple tension. Do current prices still reflect the business, or has sentiment moved further than the fundamentals?

Price-to-Earnings of 11.3x: Is it justified?

On simple earnings terms, Old National Bancorp trades on a P/E of 11.3x, close to peers. This hints at a market view that current pricing is roughly in line with comparable banks despite recent price softness.

The P/E ratio compares the share price to earnings per share and helps you see how much investors are paying for each dollar of profit. For a bank like Old National Bancorp, which is already profitable and pays a 2.26% dividend, this metric often anchors how investors think about what they are getting for the current $25.66 share price.

ONB is described as good value on several fronts, including relative to the US Banks industry average P/E of 11.9x and a peer average of 12x. The estimated fair P/E of 13.8x sits higher again. This points to a gap between where the market currently prices the business and a level that regression analysis suggests it could move toward if sentiment and fundamentals were more closely aligned.

Explore the SWS fair ratio for Old National Bancorp.

Result: Price-to-Earnings of 11.3x (UNDERVALUED)

Still, Old National Bancorp faces the risk that banking sentiment weakens or that changes in 1834’s leadership take time to translate into steadier wealth revenues.

Find out about the key risks to this Old National Bancorp narrative.

Another View on Old National Bancorp’s Value

The P/E story points one way for Old National Bancorp, yet the SWS DCF model goes much further. At a share price of $25.66 and an estimated future cash flow value of $51.22, the DCF output also flags the stock as undervalued. If both methods lean in the same direction, where could the bigger risk be: in the share price, or in the assumptions behind those cash flows?

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 Old National Bancorp 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 31 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

Curious whether the mood around Old National Bancorp matches the actual trade off between risk and reward? Act quickly, review the underlying numbers, and weigh both sides by checking the 5 key rewards and 1 important warning sign.

Looking for more Old National Bancorp investment ideas?

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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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