Is First Bancorp (FBNC) Overvalued After Its Recent Share Price Strength?

First Bancorp (FBNC) has quietly turned in a strong stretch, with shares up about 10 % over the past month and roughly 23 % this year, outpacing many regional banking peers.

See our latest analysis for First Bancorp.

That steady climb reflects growing confidence after First Bancorp’s resilient fundamentals, with a roughly 23 % year to date share price return and a solid multi year total shareholder return indicating that momentum is building rather than fading.

If First Bancorp’s run has you rethinking where the next leaders might come from, this could be a good moment to explore fast growing stocks with high insider ownership.

With earnings growing faster than revenue and the stock still trading at a notable discount to both its analyst target and estimated intrinsic value, is First Bancorp a quiet value play, or is the market already baking in future growth?

Price-to-Earnings of 22.4x: Is it justified?

On a trailing basis, First Bancorp trades at a 22.4x price to earnings ratio, putting a richer tag on its $53.10 share price than many banking peers.

The price to earnings multiple captures how much investors are willing to pay today for each dollar of the bank’s current earnings, a key lens for mature, profitable lenders. For a regional bank like First Bancorp, a higher multiple usually signals that the market expects stronger or more durable earnings growth than for the average institution.

In this case, the valuation sends a mixed message. On one hand, the stock screens expensive against the US Banks industry average of 12x and the peer average of 11.5x, as well as our own estimated fair price to earnings ratio of 16.2x, suggesting investors are paying a premium well above where the multiple might ultimately settle. On the other hand, forecasts calling for earnings growth close to 28.4% per year indicate that some of this premium reflects optimism that profits will compound meaningfully from here.

Compared to both the broader US Banks industry and its closest peers, First Bancorp’s 22.4x multiple stands out as materially higher. It is well above the 12x industry norm and 11.5x peer average, and it even stretches past the 16.2x level that our fair ratio work implies could be a more sustainable benchmark if sentiment cools.

Explore the SWS fair ratio for First Bancorp

Result: Price-to-Earnings of 22.4x (OVERVALUED)

However, earnings momentum could falter if credit quality weakens or funding costs climb faster than expected, which would pressure margins and challenge today’s premium valuation.

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

Another View: Discounted Cash Flow Signals Upside

While the 22.4x earnings multiple makes First Bancorp look expensive, our DCF model paints almost the opposite picture, with fair value estimated around $85.47 versus a $53.10 share price. If the cash flow story proves right, is the market underestimating how far this rerating could go?

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 Bancorp 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 912 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 Bancorp Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding First Bancorp.

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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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