Republic Bancorp (RBCA.A) shares have slightly rebounded over the past week after recent declines during the past month and quarter. Investors are keeping an eye on the stock’s valuation in light of its long-term performance.
See our latest analysis for Republic Bancorp.
Republic Bancorp’s latest uptick has eased some of the recent pressure. However, momentum has yet to recover from this year’s declines. Despite a strong run over the past three and five years, its 1-year total shareholder return of -10.38% shows that sentiment has cooled and investors remain cautious as they reassess value at the current $67.83 share price.
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With recent price swings and a share price still below analyst targets, the central question is whether Republic Bancorp is currently undervalued or if the market has already factored in its growth prospects. Is there a genuine buying opportunity left?
Republic Bancorp is trading at a price-to-earnings (P/E) ratio of 10.4x, notably below its industry peers and the wider US market. With shares last closing at $67.83, the market appears to be discounting future growth potential relative to competitors.
The price-to-earnings ratio measures how much investors are willing to pay for each dollar of a company’s earnings. For banks like Republic Bancorp, the P/E ratio helps illustrate how the market perceives both profitability and growth prospects.
Republic Bancorp’s multiple is lower than the US Banks industry average of 11.2x, as well as the peer group average of 12.4x. This suggests that, at current levels, the stock is more modestly valued than most rivals and could represent an attractive entry point if future performance outpaces expectations. However, compared to our estimated fair P/E ratio of 8.9x, it is still trading above what our models consider justified, so there is room for the market to adjust downward if growth disappoints.
Explore the SWS fair ratio for Republic Bancorp
Result: Price-to-Earnings of 10.4x (UNDERVALUED)
However, risks remain if revenue growth continues to stall or if net income declines further. This could challenge the undervaluation thesis and limit upside.
Find out about the key risks to this Republic Bancorp narrative.
Looking from a different angle, our SWS DCF model values Republic Bancorp shares at $109.46, which is significantly higher than the current market price. This suggests the stock may be deeply undervalued and challenges the conclusions drawn from the P/E comparison. Could the market be missing something bigger here?