- If you are wondering whether NBT Bancorp is reasonably priced or offering a margin of safety at its current US$42.78 share price, you are in the right place to get a clear, valuation focused view.
- The stock has slipped 2.0% over the last week and 3.7% over the last month, while still showing a 2.9% return year to date and longer term returns of 21.9% over 3 years and 22.7% over 5 years. These movements may signal shifting views on both its potential and its risks.
- Recent coverage of regional banks and interest rate expectations has kept investor attention on how banks like NBT Bancorp manage their balance sheets and loan books, with particular focus on funding costs and credit quality across the sector. This backdrop provides helpful context for understanding why the share price has been more volatile over shorter periods even as longer term returns remain in positive territory.
- Right now, NBT Bancorp holds a valuation score of 4 out of 6, which means it screens as undervalued on four of the six checks we use. Next we will walk through the key valuation approaches behind that score, and then finish with a way of looking at value that can give you an even clearer picture than the standard models alone.
Find out why NBT Bancorp's -6.4% return over the last year is lagging behind its peers.
Approach 1: NBT Bancorp Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn above the return that shareholders require, then capitalizes those “extra” profits into an intrinsic value per share.
For NBT Bancorp, the starting point is its Book Value of $36.21 per share and a Stable EPS of $4.54 per share, based on weighted future Return on Equity estimates from 5 analysts. The Average Return on Equity sits at 11.18%, while the Cost of Equity is $2.83 per share. That gap produces an Excess Return of $1.71 per share, which is what this model treats as value created beyond investors’ required return.
The model also uses a Stable Book Value of $40.56 per share, sourced from weighted future Book Value estimates from 6 analysts, to anchor the long term profile of the balance sheet. Pulling this together, the Excess Returns approach arrives at an estimated intrinsic value of $88.35 per share.
Compared with the current share price of $42.78, this indicates the stock is 51.6% undervalued based on this method alone.
Result: UNDERVALUED
Our Excess Returns analysis suggests NBT Bancorp is undervalued by 51.6%. Track this in your watchlist or portfolio, or discover 45 more high quality undervalued stocks.
Approach 2: NBT Bancorp Price vs Earnings
For a profitable bank like NBT Bancorp, the P/E ratio is a useful way to relate what you pay per share to the earnings the business is currently generating. It gives you a quick sense of how much investors are willing to pay for each dollar of earnings.
What counts as a “normal” or “fair” P/E depends on what investors expect for future earnings growth and how they view the risks. Higher growth or lower perceived risk can support a higher P/E, while more uncertainty or lower expected growth usually points to a lower one.
NBT Bancorp currently trades on a P/E of 13.22x. That sits above the Banks industry average of 11.45x, but below the peer group average of 15.08x. Simply Wall St’s Fair Ratio for NBT Bancorp is 13.39x, which is its proprietary view of what the P/E should be after factoring in elements like earnings growth, profit margins, market cap, industry and stock specific risks. This Fair Ratio goes a step beyond simple peer or industry comparisons because it adjusts for those company specific traits rather than assuming “one size fits all.” With the actual P/E of 13.22x sitting very close to the Fair Ratio of 13.39x, the shares look priced at about the level this model would suggest.
Result: ABOUT RIGHT
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Upgrade Your Decision Making: Choose your NBT Bancorp 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 your own story about NBT Bancorp, link that story to specific forecasts for revenue, earnings and margins, connect those forecasts to a Fair Value, then compare that Fair Value to the current price to help decide if NBT Bancorp looks attractive or expensive to you. The narrative updates automatically when new information such as earnings or buyback news arrives. For example, one investor might build a more optimistic NBT Bancorp narrative around expansion into Western New York, digital banking integration and potential semiconductor related opportunities that supports a higher Fair Value. Another might focus on slower growth markets, commercial lending risk, rising costs and regulatory pressures, leading to a more cautious Fair Value, all within the same easy to use tool.
Do you think there's more to the story for NBT Bancorp? 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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