Is BankUnited (BKU) Pricing Look Attractive After Recent Share Price Gains?
- If you are wondering whether BankUnited's current share price lines up with its underlying value, this article will walk through what the numbers are saying and where that might leave you as an investor.
- BankUnited's stock last closed at US$49.29, with returns of 10.9% over the past 30 days, 10.1% year to date, 26.7% over 1 year, 42.8% over 3 years and 43.8% over 5 years. These figures help frame the context for any valuation discussion.
- Recent coverage around US regional banks has kept attention on interest rate sensitivity, funding costs and credit quality, and BankUnited has been part of those broader sector conversations. That backdrop helps explain why investors may be reassessing both the risk profile and the price they are willing to pay for the stock today.
- On our framework BankUnited scores 3 out of 6 on undervaluation checks. You can see the breakdown of that valuation score before we walk through the key methods, then finish with a different way of looking at value that ties everything together.
Approach 1: BankUnited Excess Returns Analysis
The Excess Returns model looks at how much profit BankUnited is expected to earn above the return that equity investors typically require, then links that back to the value of its equity base per share.
For BankUnited, the starting point is a Book Value of $41.19 per share and a Stable EPS estimate of $4.51 per share, based on weighted future Return on Equity estimates from 9 analysts. The Average Return on Equity is 9.69%. Against this, the Cost of Equity is assessed at $3.33 per share, which implies an Excess Return of $1.17 per share, the amount the bank is projected to earn above that cost.
The model also uses a Stable Book Value estimate of $46.52 per share, sourced from weighted future book value estimates from 7 analysts, to capture how the equity base might compound over time. Together, these inputs produce an estimated intrinsic value of about $77.85 per share. Compared with the recent share price of $49.29, this Excess Returns valuation suggests the stock is trading at roughly a 36.7% discount, which screens as materially undervalued on this framework.
Result: UNDERVALUED
Our Excess Returns analysis suggests BankUnited is undervalued by 36.7%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.
Approach 2: BankUnited Price vs Earnings
For a profitable bank like BankUnited, the P/E ratio is a useful shorthand for how much investors are currently paying for each dollar of earnings. It ties directly to the bottom line and lets you compare pricing across banks that already generate consistent profits.
What counts as a "normal" or "fair" P/E depends on what the market expects from a company and how risky it is perceived to be. Higher expected earnings growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk tends to come with a lower P/E.
BankUnited currently trades on a P/E of 13.91x. That is above the Banks industry average of 11.83x and below the peer group average of 21.52x. Simply Wall St also calculates a proprietary Fair Ratio of 12.96x, which estimates the P/E you might expect once factors like BankUnited's earnings growth profile, profitability, risk characteristics, industry and market cap are taken into account. This tailored Fair Ratio can be more informative than a simple comparison with peers or the broad industry, because it adjusts for those company specific drivers.
BankUnited's current P/E of 13.91x is modestly above the Fair Ratio of 12.96x, which in this framework indicates that the shares screen as slightly overvalued.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your BankUnited Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives, where you set out your story for BankUnited, link that story to a forecast for revenue, earnings and margins, and arrive at your own Fair Value that updates automatically as new news or earnings arrive. You can then compare it to the current price to decide what action makes sense for you, whether that is closer to the higher Fair Value estimate of about US$77.85 per share implied by the Excess Returns model, or nearer to the lower community view around US$53.64. This shows how two investors can look at the same bank and reach very different but clearly framed conclusions.
Do you think there's more to the story for BankUnited? 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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