1st Source (SRCE) is back in focus after first quarter 2026 results paired higher net interest income and net income with a sharp rise in net charge offs and a larger quarterly dividend.
See our latest analysis for 1st Source.
The stock has had a softer 1 day share price return of 1.08% and a 7 day share price return of 1.00%. However, a 16.97% year to date share price return and 22.88% 1 year total shareholder return point to momentum that has built over time. Recent buybacks, higher net interest income, and the dividend increase are likely shaping how investors view both growth potential and credit risk around the higher net charge offs.
If you are weighing 1st Source against other ideas in your portfolio, it can help to compare it with resilient companies that have passed strict balance sheet checks, using the solid balance sheet and fundamentals stocks screener (44 results)
With the stock trading at $73.06, an indicated 9% discount to one analyst price target and a 42% gap to an intrinsic value estimate, the real question is whether this signals upside or whether markets already see the future growth story.
Preferred P/E of 11x: Is it justified?
On a P/E of 11x at a last close of $73.06, 1st Source screens slightly cheaper than both peers and the wider US Banks industry, even though the gap to an intrinsic value estimate is larger.
The P/E ratio compares the current share price to earnings per share. It reflects what investors are currently willing to pay for each dollar of earnings. For a bank like 1st Source, with earnings that have grown 7.5% per year over the past 5 years and 14.2% over the past year, the multiple gives a quick sense of how that profit record is being priced in.
At 11x earnings, the stock sits below the peer average P/E of 13.6x and marginally below the US Banks industry average of 11.4x. This suggests the market is not assigning a premium despite its high quality earnings and higher current net profit margin of 37.4% compared with 35.9% last year. However, the estimated fair P/E ratio of 10.6x implies the present valuation is slightly ahead of where the SWS fair ratio model suggests the market could settle over time, even as the SWS DCF model flags a 42.4% discount to an estimate of future cash flow value of $126.78.
Explore the SWS fair ratio for 1st Source
Result: Price-to-earnings of 11x (ABOUT RIGHT)
However, investors still need to weigh higher net charge offs alongside credit quality trends and the risk that a richer valuation may limit the margin of safety.
Find out about the key risks to this 1st Source narrative.
Another view from the SWS DCF model
The P/E story says 1st Source looks roughly in line with where the market might settle, yet the SWS DCF model points to something different. On that view, the stock at $73.06 trades at a 42.4% discount to an estimated future cash flow value of $126.78. This raises a simple question: which lens should matter more to you right now?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out 1st Source 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 48 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 signals leaves you slightly on the fence, that can be a useful starting point to look more closely at the details yourself. To see what is driving optimism around the stock, take a closer look at its 3 key rewards
Looking for more investment ideas?
If 1st Source has caught your attention, do not stop here. Broaden your watchlist with a few focused stock ideas that match different goals and risk levels.
- Target potential mispricing by scanning for companies that combine quality fundamentals with attractive pricing using the 48 high quality undervalued stocks
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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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