A Look at First Citizens BancShares’s Valuation Following Q3 Beats and BMO Branch Acquisition

First Citizens BancShares (FCNC.A) posted third-quarter results that exceeded market expectations, highlighted by improved net interest income and solid loan growth. The company also unveiled an agreement to acquire 138 BMO Bank branches, which signals ongoing expansion.

See our latest analysis for First Citizens BancShares.

While First Citizens BancShares has made headline-grabbing moves, such as acquiring 138 BMO Bank branches and completing a significant buyback, its share price tells a more measured story. The stock is currently trading at $1,751.52, with short-term momentum mixed: after a solid 6.9% gain over the past week, it remains down 16.7% year-to-date. Nevertheless, the one-year total shareholder return stands at -6.5%. Looking at a longer timeline shows substantial long-term gains, including a 124% total return over three years and 284% over five, signaling that investors who have stuck with the bank have been well rewarded over the long haul.

If you’re interested in broadening your investment search, now’s a great time to discover fast growing stocks with high insider ownership.

With the company trading well below analyst price targets and posting better-than-expected earnings, investors are left to wonder if First Citizens BancShares is undervalued, or if the market is already pricing in its next wave of growth.

Most Popular Narrative: 19.9% Undervalued

Compared to its latest closing price of $1,751.52, the narrative suggests a fair value nearly 20% higher. This sets up a clear gap between typical market sentiment and what analysts project for First Citizens BancShares.

The company is leveraging its strong balance sheet and liquidity position to continue share repurchase programs, which are expected to improve earnings per share (EPS) significantly by reducing the number of shares outstanding. First Citizens anticipates further growth in deposits through its Direct Bank and General Bank, using digital strategies and proactive marketing to attract and retain clients, potentially enhancing net interest income as deposit rates decline.

Read the complete narrative.

Is there a hidden formula fueling this bullish narrative? Big buybacks, digital deposit growth, and a changing share count set the stage for a valuation twist that might surprise even seasoned investors. Ready to uncover the bold projections and the profit story behind that fair value figure?

Result: Fair Value of $2,186.54 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, looming interest rate cuts and credit exposure in specific portfolios could challenge the optimistic outlook. This may potentially weigh on future earnings and margins.

Find out about the key risks to this First Citizens BancShares narrative.

Build Your Own First Citizens BancShares Narrative

If you see the numbers differently, or want to reach your own conclusions, consider taking a few minutes to build your personal investment narrative. Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding First Citizens BancShares.

Looking for More Smart Investment Opportunities?

Don't just watch from the sidelines. Seize the chance to find your next winning stock. These ideas could be the spark your portfolio needs right now.

• Uncover overlooked potential by checking out these 3573 penny stocks with strong financials. These are making waves in early-stage markets and redefining what is possible for fast growth.
• Position yourself for tomorrow's gains with these 33 healthcare AI stocks, which is at the intersection of technology and medicine and revealing innovations transforming healthcare delivery and diagnostics.
• Boost your portfolio's income stream by pursuing these 17 dividend stocks with yields > 3%. These consistently deliver attractive yields and long-term stability.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com