- Wondering if United Bankshares at around US$39.38 is still a fair deal or starting to look stretched? This article breaks down what the current share price might be implying about value.
- The stock’s returns range from a 1.4% decline over the last 7 days and a 10.7% decline over the last 30 days, to gains of 2.6% year to date, 17.5% over 1 year, 25.7% over 3 years and 25.2% over 5 years. These figures can mean very different things depending on how you think about risk and timing.
- Recent coverage has focused on United Bankshares as a regional banking name, with attention on how its share price reacts to sector sentiment and changing expectations for banks more broadly. This context helps frame whether the recent pullback is just noise or a signal to reassess what the market is willing to pay.
- United Bankshares currently holds a valuation score of 3 out of 6. The rest of this article will walk through traditional approaches like P/E, DCF and peer comparisons, then finish with a broader way to think about valuation that ties all of these signals together.
Find out why United Bankshares's 17.5% return over the last year is lagging behind its peers.
Approach 1: United Bankshares Excess Returns Analysis
The Excess Returns model looks at how much profit a bank is expected to earn above the return that equity investors require, then ties that to the value of its book equity. For United Bankshares, this starts with a Book Value of $39.38 per share and an Average Return on Equity of 8.81%.
Analysts see Stable EPS at $3.75 per share, based on weighted future Return on Equity estimates from 5 analysts. Against a Cost of Equity of $2.97 per share, that implies an Excess Return of $0.78 per share. In other words, the model assumes United Bankshares generates earnings that sit above the minimum return equity holders are asking for.
The valuation also uses a Stable Book Value estimate of $42.53 per share, again sourced from weighted future Book Value estimates from 5 analysts. Combining these inputs, the Excess Returns model arrives at an intrinsic value of about $64.39 per share, which is 38.8% above the current price of around $39.38. On this measure, the stock screens as undervalued.
Result: UNDERVALUED
Our Excess Returns analysis suggests United Bankshares is undervalued by 38.8%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.
Approach 2: United Bankshares Price vs Earnings
For a profitable bank like United Bankshares, the P/E ratio is a useful way to think about value because it links what you pay today with the earnings the business is currently generating. A “normal” or “fair” P/E tends to be higher when investors expect stronger earnings growth or see lower risk, and lower when growth expectations are modest or risks are higher.
United Bankshares is trading on a P/E of 11.82x. This sits slightly above the Banks industry average P/E of 11.18x, and below the broader peer group average of 13.79x. Simply Wall St’s Fair Ratio for United Bankshares is 11.73x, which is its own estimate of an appropriate P/E once factors such as earnings growth, profit margins, risk profile, industry and market cap are considered.
The Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for the company’s specific characteristics rather than assuming that all banks deserve the same multiple. Here, the Fair Ratio of 11.73x is very close to the current P/E of 11.82x, suggesting the share price is in line with what this framework would imply.
Result: ABOUT RIGHT
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your United Bankshares Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in, giving you a simple story that links your view of United Bankshares to a forecast and then to a fair value. A Narrative on Simply Wall St is your own explanation for the numbers, where you set assumptions for future revenue, earnings and margins, then see how that translates into what you think the shares are worth. These Narratives sit inside the Community page on Simply Wall St, used by millions of investors, and are designed to be quick to set up and easy to compare. Once you have a Narrative, you can regularly check whether your fair value sits above or below the current market price to help you decide if the stock looks appealing or not. Narratives are also refreshed when new information such as news or earnings is released, keeping your view aligned with the latest data. For United Bankshares, one investor might build a Narrative that points to a much higher fair value while another might see a much lower figure, showing how different perspectives can coexist around the same stock.
Do you think there's more to the story for United Bankshares? 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com