Why Stock Yards Bancorp is on investors’ radar today
Stock Yards Bancorp (SYBT) has drawn fresh attention after recent share price moves, with the stock showing a month return near 9% decline and a past 3 months return near 4% decline.
For investors tracking regional banks, those short term moves sit alongside a 1 year total return near 5% decline and longer term 3 year and 5 year total returns around 29%, supported by reported revenue of US$390.56m and net income of US$140.15m.
See our latest analysis for Stock Yards Bancorp.
With the share price around US$64.63, the stock’s recent 30 day share price return of around a 9% decline and 90 day share price return of roughly a 4% decline suggest momentum has cooled compared with the stronger 3 and 5 year total shareholder returns.
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So, with recent share price weakness, longer term gains, and an intrinsic value estimate suggesting a discount near 41%, is Stock Yards Bancorp quietly undervalued, or is the market already pricing in its future growth?
Price-to-Earnings of 13.6x: Is it justified?
On earnings, Stock Yards Bancorp trades on a P/E of 13.6x, which sits in a mixed spot, looking slightly below some peers but above others at the last close of $64.63.
The P/E multiple tells you how much investors are paying today for each dollar of current earnings, which is especially relevant for a profitable bank with an established track record. For SYBT, that profitability includes reported net income of $140.15m and earnings growth of 22.4% over the past year, with profit margins at 35.9% compared with 33.4% last year.
Compared with peer groups, the picture is not one sided. SYBT is described as good value when set against a peer average P/E of 14.1x. However, it is considered expensive versus the broader US Banks industry average of 11.3x and also trades above an estimated fair P/E of 11.8x that our models suggest the market could gravitate toward over time.
Explore the SWS fair ratio for Stock Yards Bancorp
Alongside the multiples picture, our DCF model currently points to a fair value of $109.92, with SYBT trading at $64.63, which implies the shares are at a 41.2% discount to that estimate. The SWS DCF model works by projecting future cash flows and discounting them back to today to reflect the time value of money and perceived risk.
For a bank growing earnings at 22.4% over the past year and 15.8% per year over the last 5 years, and with earnings forecast to grow 9.3% per year, this kind of cash flow based view helps frame how much of that profile is already reflected in the current price. At the same time, it is worth keeping in mind that analysts expect revenue growth of 10.7% per year and earnings growth below the wider US market, which may help explain why the market is assigning a P/E that sits between its close peers and the industry average.
Look into how the SWS DCF model arrives at its fair value.
Result: Price-to-Earnings of 13.6x (ABOUT RIGHT)
However, those valuation signals could be knocked off course if revenue or net income growth of around 11% and 9% slows, or if regional banking conditions tighten.
Find out about the key risks to this Stock Yards Bancorp narrative.
Another view on what the market is pricing in
While the P/E of 13.6x might look reasonable against close peers at 14.1x, it also sits above the US Banks industry at 11.3x and above a fair ratio of 11.8x that the market could move toward. That gap points to some valuation risk if sentiment cools.
See what the numbers say about this price — find out in our valuation breakdown.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Stock Yards 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 49 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 this mix of potential upside and valuation risk has you thinking hard about SYBT, move quickly, review the details, and weigh the 4 key rewards against your own view.
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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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