Coastal Financial (CCB): A Fresh Look at Valuation as Sector Loan Quality Concerns Reshape Investor Focus

Recent disclosures from peer lenders about loan charge-offs and challenges with collateral have sparked new concerns around loan quality. This has sent a ripple of volatility through regional bank stocks like Coastal Financial (CCB).

See our latest analysis for Coastal Financial.

Coastal Financial’s share price has seen some swings lately as investors weigh its market share gains and solid earnings growth against fresh banking sector fears. The stock is still up over 20% year-to-date, with an impressive 1-year total shareholder return of nearly 73%, and a massive 5-year total return above 580%. This signals that long-term momentum remains strong even as short-term volatility rises.

If sector volatility has you curious about other opportunities, it could be the perfect time to broaden your search and discover fast growing stocks with high insider ownership

With the stock still trading below analyst price targets and Coastal Financial posting robust growth numbers, the question becomes whether there is untapped value left for investors or if the market has already priced in the company’s future gains.

Price-to-Earnings of 32.4x: Is it justified?

Coastal Financial's shares last closed at $102. The stock is trading at a price-to-earnings ratio of 32.4 times, which suggests investors are paying a premium for current earnings relative to both industry peers and the broader market.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay today for a dollar of company earnings. In the banking sector, a high P/E can indicate expectations for strong future growth, premium profitability, or business differentiators. However, it may also point to market over-optimism.

In this case, Coastal Financial’s 32.4x multiple is nearly three times higher than the US banks industry average of 11.2x and considerably above the peer average of 12.2x. Regression analysis suggests a fair P/E closer to 20.4x, highlighting just how stretched current valuations have become. The market appears to be pricing in much faster earnings growth or unique advantages compared to the typical bank.

Explore the SWS fair ratio for Coastal Financial

Result: Price-to-Earnings of 32.4x (OVERVALUED)

However, slowing revenue growth or further loan quality issues could quickly cool investor enthusiasm and challenge the stock’s high valuation.

Find out about the key risks to this Coastal Financial narrative.

Another View: SWS DCF Model Sees Undervaluation

While the price-to-earnings ratio suggests Coastal Financial might be expensive, our DCF model tells a different story. According to this analysis, CCB is trading about 14% below its estimated fair value. This could imply there is more upside ahead. Does this divergence highlight a hidden opportunity or a valuation trap?

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 Coastal Financial 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 Coastal Financial Narrative

If you have a different perspective or want to dig into the numbers yourself, it only takes a few minutes to build your own view of the story with Do it your way.

A great starting point for your Coastal Financial research is our analysis highlighting 4 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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