What Recent Regulatory Discussions Mean for First International Bank of Israel’s Share Price in 2025

Thinking about what’s next for First International Bank of Israel stock? You’re not alone. With a stellar 53.4% gain over the past year and an astonishing 301.6% surge over the last five years, plenty of investors are wondering if there’s still room to run or if things are getting a bit overheated. The recent 21.7% jump year-to-date reflects ongoing optimism. However, there was a minor pullback this past month, down 4.6%, and a slight dip of 1.4% over the last week. These short-term changes often reflect shifts in market sentiment and recent activity in Israeli financial stocks. Discussions about interest rates and capital requirements have also put banks in the spotlight.

Before deciding whether to buy, sell, or simply hold, it’s worth considering whether First International Bank of Israel is valued fairly today. According to standard valuation checks, the company scores a 3 out of 6 for being undervalued, meaning it passes half of the typical benchmarks that might indicate a bargain. This gives us some clues, but not the full picture.

Let's walk through those valuation approaches and consider what they really tell us, because there is an even more insightful way to cut through the numbers coming up later in the article.

Why First International Bank of Israel is lagging behind its peers

Approach 1: First International Bank of Israel Excess Returns Analysis

The Excess Returns model assesses a bank's ability to generate returns above its cost of equity. It focuses on how effectively management invests shareholders' funds. The idea is that when a company earns more on invested capital than it pays to obtain that capital, it is creating genuine value for its shareholders.

For First International Bank of Israel, several key metrics are used in the Excess Returns method:

• Book Value: ₪142.13 per share
• Stable EPS: ₪21.52 per share (based on the median Return on Equity from the past 5 years)
• Cost of Equity: ₪10.66 per share
• Excess Return: ₪10.86 per share
• Average Return on Equity: 17.89%
• Stable Book Value: ₪120.31 per share (median value over 5 years)

This model estimates an intrinsic value of ₪305.25 per share. Compared to the current market price, this implies the stock is 28.3% undervalued. The methodology assumes that First International Bank of Israel can continue to earn returns above its cost of equity, supported by consistent profitability and disciplined capital management.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for First International Bank of Israel.

Our Excess Returns analysis suggests First International Bank of Israel is undervalued by 28.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: First International Bank of Israel Price vs Earnings

The Price-to-Earnings (PE) ratio is the preferred valuation metric for analyzing profitable banks like First International Bank of Israel because it relates a company's share price to its actual earnings. For investors, it provides a quick way to gauge whether a stock is expensive or reasonable compared to how much profit it generates.

The “right” PE ratio doesn't exist in a vacuum. Higher PE ratios are often warranted when investors expect faster earnings growth, lower risks, or greater profitability. Lower PE ratios can reflect limited growth prospects, increased risk, or industry challenges. It is always essential to look at PE in context.

Currently, First International Bank of Israel trades at a PE of 9.31x. This compares to an industry average of 10.41x for banks and a peer group average of 8.69x. At face value, FIBI’s valuation sits just below the industry level and a bit higher than peer averages, signaling a roughly average valuation within its landscape.

Simply Wall St's Fair Ratio is a proprietary metric that refines this comparison. Unlike basic industry or peer averages, the Fair Ratio factors in the company’s actual earnings growth pace, profit margins, risk profile, market cap, and industry characteristics. This provides a far more nuanced estimate of what is fair for FIBI specifically, rather than lumping it in with a one-size-fits-all benchmark.

In this case, the Fair Ratio sits very close to the current PE multiple. This suggests First International Bank of Israel is valued about in line with what its fundamentals and future outlook would suggest.

Result: ABOUT RIGHT

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 First International Bank of Israel Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, intuitive way to connect the story you believe about First International Bank of Israel with your financial assumptions such as fair value and future growth estimates. This creates a bridge between what’s happening in the real world and the numbers you see on screen.

Narratives help you translate your insights, forecasts, or concerns into a clear financial outlook, instantly showing the fair value that results from your perspective. This gives you clarity on whether to buy, hold, or sell by directly comparing your calculated Fair Value to the current share price. Narratives are easy to use and available to everyone in the Community page on Simply Wall St, where millions of investors exchange their views.

As fresh news or earnings reports arrive, Narratives are automatically updated so your investment thesis evolves in real time. For example, one investor might use optimistic growth forecasts to arrive at a much higher fair value for First International Bank of Israel, while another might focus on more conservative earnings and see it as fairly valued or even overvalued.

Do you think there's more to the story for First International Bank of Israel? 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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