Bank First (BFC): Assessing Valuation After Strong Q3 Earnings Beat and Dividend Boost

Bank First (BFC) delivered a third-quarter earnings report that beat expectations. Strong loan growth and higher yields from repricing helped drive both net income and net interest income higher year over year.

See our latest analysis for Bank First.

After a strong earnings report and the appointment of a new board member, Bank First’s shares have shown fresh momentum, holding at $128.6 after a recent upswing. Investors have enjoyed a stellar 46.88% total shareholder return over the past year, and triple-digit gains over the past five years point to long-term value compounding as confidence in the bank’s strategy continues to build.

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With shares trading near record highs and revenue growth running strong, the question now is whether Bank First remains undervalued or if the market has already priced in the bank’s next chapter of growth.

Price-to-Earnings of 18x: Is it justified?

Bank First trades at a price-to-earnings ratio of 18x, noticeably above the last close at $128.6 and higher than its sector’s average. This premium valuation suggests the market expects the bank to outperform peers in profitability or growth.

The price-to-earnings (P/E) ratio measures a company's current share price relative to its per-share earnings. For banks, this multiple is a popular way to compare profitability and perceived growth potential with other institutions.

Bank First's valuation stands out because its P/E far exceeds both the US Banks industry average of 11.3x and the peer average of 11.2x. A look at the fair P/E ratio, based on regression analysis, indicates that 14.5x may be a more justified level for the current stage of the business. This further underlines that Bank First may be priced for more optimistic growth than what is typical for similar institutions.

Explore the SWS fair ratio for Bank First

Result: Price-to-Earnings of 18x (OVERVALUED)

However, rising valuations and a recent dip in share price could trigger profit-taking if earnings momentum slows or if market sentiment shifts unexpectedly.

Find out about the key risks to this Bank First narrative.

Another View: Discounted Cash Flow Paints a Different Picture

Looking through the lens of our DCF model, Bank First appears to be trading 19.5% below its estimated fair value of $159.81. While the price-to-earnings ratio hints at overvaluation, this cash flow approach signals potential undervaluation. Which view tells the truer story for the bank's future?

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 First 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 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 First Narrative

If you have your own perspective or wish to dig deeper into the numbers, crafting your personal take is quick and easy. Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Bank First.

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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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