Assessing First Busey (BUSE) Valuation After Q3 Earnings Surge and Share Buyback Completion

First Busey (BUSE) just released its third quarter earnings, drawing attention for a big jump in both net interest income and net income compared to the same period last year. The company also completed a share buyback.

See our latest analysis for First Busey.

Even with stronger quarterly results and a sizable buyback now wrapped up, First Busey’s share price hasn’t seen much upside. Year-to-date, the share price is down 1.8%, and its total shareholder return over the past year sits at -3.1%. In the longer term, the five-year total shareholder return of 33% hints at underlying resilience, even while recent momentum has faded a bit.

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With analysts seeing upside to the current price and strong recent profit growth, the big question for investors is whether First Busey’s shares are undervalued with more room to run, or if the market is already factoring in future gains.

Price-to-Earnings of 20.7x: Is it justified?

First Busey is trading at a price-to-earnings (P/E) ratio of 20.7x, considerably higher than both its US Banks industry average of 11x and the peer average of 16.8x. The last closing price was $22.66, positioning shares toward the more expensive end of the sector on an earnings basis.

The P/E ratio measures how much investors are willing to pay for each dollar of company earnings. For banks like First Busey, this multiple signals how the market values current profitability and outlook. A high P/E might mean investors expect either strong future profit growth or superior quality, or it could indicate that investors are overpaying relative to actual prospects.

Compared to industry norms, First Busey’s P/E suggests the market is pricing in much higher expectations than for most banks. When set against the estimated fair P/E ratio of 18.1x, shares still appear elevated. This highlights potential overvaluation if growth and profitability do not justify the premium.

Explore the SWS fair ratio for First Busey

Result: Price-to-Earnings of 20.7x (OVERVALUED)

However, rapidly rising loan losses or a sharp slowdown in revenue growth could quickly challenge the optimistic outlook that supports the higher valuation.

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

Another View: DCF Suggests a Different Story

While the earnings multiple points to overvaluation, our SWS DCF model paints a surprisingly different picture. Based on future cash flows, First Busey’s shares are trading at a steep 51% discount to estimated fair value. This suggests they may actually be undervalued. Does this gap signal an overlooked opportunity, or is the market rightly skeptical?

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 First Busey 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 840 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 First Busey Narrative

Feel free to challenge these perspectives or take a hands-on approach. Creating your own narrative using the latest data takes just a few minutes. Do it your way

A great starting point for your First Busey research is our analysis highlighting 3 key rewards and 2 important warning signs 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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