- If you are wondering whether S&T Bancorp at around US$40.20 is offering fair value or a possible bargain, you are not alone, and this article is designed to help you frame that question clearly.
- The stock has seen mixed recent returns, with a 1.3% decline over the last week and an 8.0% decline over the last 30 days, set against gains of 2.4% year to date, 8.5% over 1 year, 38.6% over 3 years and 42.6% over 5 years.
- Recent attention on regional banks, along with continuing investor focus on balance sheet strength and capital return policies, has helped shape views on risk and potential resilience for names like S&T Bancorp. This backdrop provides helpful context when you line up the share price against common valuation measures such as P/E, dividend yield and asset-based metrics.
- On Simply Wall St's 6 point valuation checklist, S&T Bancorp scores 4 out of 6, which suggests there are several areas where the stock screens as potentially undervalued. Next, we will look at how different valuation approaches arrive at that view before finishing with a way to assess value that goes beyond just the numbers.
Find out why S&T Bancorp's 8.5% return over the last year is lagging behind its peers.
Approach 1: S&T Bancorp Excess Returns Analysis
The Excess Returns model asks a simple question: are the profits S&T Bancorp earns on its equity meaningfully higher than the return investors expect for taking on the risk of owning the stock, and is that gap likely to persist?
On this view, S&T Bancorp is anchored by a Book Value of about $39.14 per share, with a Stable Book Value estimate of $42.54 per share, both based on inputs from 6 analysts. Those estimates pair with Stable EPS of $3.83 per share and an Average Return on Equity of 9.01%. The model uses a Cost of Equity of $2.97 per share, which implies an Excess Return of $0.86 per share, so earnings are above the level required to compensate shareholders for risk, but not by a huge margin.
When those excess returns are projected forward and discounted, the Excess Returns valuation arrives at an estimated intrinsic value of about $66.77 per share. Compared with the current price near $40.20, this implies the stock screens as meaningfully undervalued, with an intrinsic discount of roughly 39.8%.
Result: UNDERVALUED
Our Excess Returns analysis suggests S&T Bancorp is undervalued by 39.8%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: S&T Bancorp Price vs Earnings
For a consistently profitable bank, the P/E ratio is a straightforward way to relate what you pay for the stock to the earnings it generates. You can think of a “normal” or “fair” P/E as the level that reflects the market’s view of growth potential and risk, with higher growth or lower perceived risk often lining up with a higher multiple, and slower growth or higher risk matching a lower one.
S&T Bancorp currently trades on a P/E of about 10.95x. That sits below the Banks industry average of roughly 11.18x and the peer group average of about 12.91x, so the stock is priced at a discount to both wider sector and closer comparables on this simple measure.
Simply Wall St’s Fair Ratio for S&T Bancorp is 10.39x. This is a proprietary estimate of what the P/E “should” be, based on factors such as the company’s earnings growth profile, profit margins, risk indicators, industry, and market cap. Because it blends these company specific inputs, the Fair Ratio can be more tailored than a broad industry or peer comparison. Set against today’s actual P/E of 10.95x, the stock screens as modestly overvalued on this metric.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your S&T Bancorp Narrative
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple tool on Simply Wall St’s Community page that lets you attach your own story about S&T Bancorp to concrete numbers. You can link what you believe about its future revenue, earnings, margins and risks to a financial forecast, a fair value estimate, and finally a clear comparison between that Fair Value and today’s Price. All of this then updates as new information such as news, earnings or deal commentary comes through.
For example, one investor might build a more cautious S&T Bancorp Narrative around competition from fintechs, geographic concentration and regulation that supports a fair value close to the US$41.17 analyst target. Another might build a more optimistic Narrative around disciplined risk management, deposit strength, capital flexibility and regional trends that supports a fair value closer to the US$45 model output or even toward the US$47 target. This gives you a structured way to see how different views on the same bank can lead to different conclusions about whether the current share price looks attractive or not to you.
Do you think there's more to the story for S&T 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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