Does BNP Paribas Still Offer Value After 31.6% Share Price Jump in 2024?

If you have BNP Paribas on your watchlist, you are not alone. Plenty of investors are eyeing the stock after a remarkable run that has seen its share price climb 31.6% year-to-date and an incredible 230.2% over the last five years. Even in the past month, BNP Paribas has squeezed out a 2.4% gain, bucking the broader market’s recent jitters and persistent uncertainty around European financials. The bank’s resilience reflects both a recalibration of risk perception and a fresh sense of optimism driven by ongoing market developments, particularly those highlighting the stability of well-capitalized banks with international reach.

Despite these impressive gains, the real question is where the stock stands now from a valuation perspective. Is BNP Paribas’s winning streak built to last, or are investors already paying up for future hopes? According to a recent multi-check valuation assessment, the company scores a robust 5 out of 6. This indicates it is undervalued in nearly every metric that matters. That makes any decision to buy, hold, or sell this stock all the more interesting, as it suggests there might still be room for growth, even after such a strong rally.

Let’s break down how BNP Paribas stacks up across the most recognized valuation approaches and, more importantly, look for an even deeper, more insightful way to assess its true worth a little later on.

Why BNP Paribas is lagging behind its peers

Approach 1: BNP Paribas Excess Returns Analysis

The Excess Returns Model is designed to evaluate whether a bank is generating returns above the cost of its capital. This approach compares BNP Paribas’s average return on equity to its cost of equity, measuring the extent to which each euro invested in the business generates superior profits.

According to analyst estimates, BNP Paribas currently has a book value of €101.74 per share and a stable book value expected to reach €114.26 per share. The projected stable earnings per share (EPS) are €11.70, sourced from a weighted average of future Return on Equity estimates provided by 14 analysts. Meanwhile, the cost of equity per share stands at €8.64. This means the excess return generated is €3.06 per share. The bank’s average return on equity is solid at 10.24%, suggesting efficient capital management.

Based on these fundamentals, the Excess Returns valuation places BNP Paribas’s intrinsic value at approximately €168.42 per share. This implies a substantial 53.7% discount to the current share price, suggesting that investors are undervaluing the strength of BNP Paribas’s capital returns compared to its cost of capital and future growth prospects.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BNP Paribas.

Our Excess Returns analysis suggests BNP Paribas is undervalued by 53.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: BNP Paribas Price vs Earnings

The price-to-earnings (PE) ratio is often considered the most relevant valuation multiple for established, profitable companies like BNP Paribas. This metric tells us how much investors are willing to pay for each euro of current earnings, offering a straightforward snapshot of market expectations. Typically, companies with stronger growth prospects and lower risk profiles command higher PE ratios. Those with weaker growth or greater risks tend to trade at lower multiples.

Currently, BNP Paribas trades at a PE ratio of 8.2x. For context, the average for European banks stands at 10.3x, and BNP Paribas’s major peers average around 9.4x. This means BNP Paribas is trading at a noticeable discount both to its industry and direct competitors, suggesting the market may be undervaluing its earnings strength or factoring in company-specific risks.

To add nuance, Simply Wall St’s proprietary Fair Ratio for BNP Paribas is 8.7x. This custom benchmark reflects factors like earnings growth, industry conditions, profit margins, company size, and risk. It serves as a more tailored standard than peer or industry averages. While comparing to the broader market or peers can be helpful, the Fair Ratio provides a sharper lens on intrinsic value because it incorporates the unique characteristics of BNP Paribas.

With the current PE of 8.2x sitting just below the Fair Ratio of 8.7x, BNP Paribas appears modestly undervalued based on earnings power and all relevant fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BNP Paribas Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story: the perspective you have about a company's future, paired with your chosen forecasts for things like revenue, earnings, and profit margins. It links the company's big picture (such as digital banking expansion or regulatory risks) directly to concrete financial estimates and ultimately, to your version of fair value.

Narratives are easy to use and are available on Simply Wall St’s Community page, where millions of investors explore, share, and compare different views. By selecting or tailoring a Narrative, you combine your investment logic with the latest numbers, so you can clearly see whether the current price gives you enough upside based on your beliefs.

What makes Narratives powerful is their dynamic nature. They update automatically as new news, earnings, or regulatory changes arrive, so your conclusions stay relevant. For example, with BNP Paribas, bullish users might focus on digital and sustainable finance driving robust earnings and a fair value above €100, while more cautious investors might emphasize Eurozone risks and set their fair value closer to €77. Narratives put your perspective at the center, making “buy” or “sell” much clearer and more personal.

Do you think there's more to the story for BNP Paribas? Create your own Narrative to let the Community know!

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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