Bank Leumi (TASE:LUMI): Evaluating Valuation After Strong Revenue Growth and Recent Share Price Gains

Bank Leumi le-Israel B.M (TASE:LUMI) has delivered a 7% revenue increase over the past year, catching investors’ attention. The stock is also up nearly 10% in the past month, and this continues a strong upward trend.

See our latest analysis for Bank Leumi le-Israel B.M.

Building on this momentum, Bank Leumi le-Israel B.M’s share price has gained an impressive 9.5% over the past month, with a year-to-date share price return of nearly 58%. Long-term investors have seen even greater rewards, as the total shareholder return has soared more than 330% over five years. This reflects consistent performance and growing confidence in the bank’s outlook.

If this kind of steady growth inspires you, now could be the perfect time to discover fast growing stocks with high insider ownership.

With shares still trading at a modest discount to analyst price targets, the key question for investors is whether Bank Leumi le-Israel B.M is genuinely undervalued, or if the market has already taken its impressive growth prospects into account.

Price-to-Earnings of 10.1x: Is it justified?

Bank Leumi le-Israel B.M is trading at a price-to-earnings (P/E) ratio of 10.1x. This means investors are paying 10.1 times the company's earnings per share to own a stake at the last close price of ₪69.15. This is a widely used measure to determine whether a company's shares are expensive or attractively priced relative to its earnings.

The P/E ratio is especially relevant for banks like Leumi, since it captures how the market values the profit-generating power of its core business. A higher multiple can suggest optimism about future growth or profitability, while a lower multiple may point to concerns about earnings sustainability or sector headwinds.

Currently, Leumi's P/E of 10.1x is higher than the Asian Banks industry average of 9.3x. This signals the market is assigning a premium to Leumi over regional peers, potentially reflecting recent growth momentum and robust earnings quality. In contrast, against its peer average of 10.3x, Leumi appears modestly priced.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 10.1x (OVERVALUED)

However, risks remain if sector sentiment shifts or if future profit growth slows. This could temper Bank Leumi le-Israel B.M’s strong momentum.

Find out about the key risks to this Bank Leumi le-Israel B.M narrative.

Another View: What Does the SWS DCF Model Say?

While Bank Leumi le-Israel B.M currently looks pricey based on its price-to-earnings ratio, our DCF model tells a different story. According to the SWS DCF model, the shares are trading about 9.5% below our fair value estimate. This suggests some upside could still be on the table. Can the fundamentals back this up, or is it just market optimism?

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 Bank Leumi le-Israel B.M 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 919 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Bank Leumi le-Israel B.M Narrative

If you have a different perspective, or would rather dig into the numbers yourself, you can build your own analysis in just minutes. Do it your way

A great starting point for your Bank Leumi le-Israel B.M research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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