Old Second Bancorp (OSBC): Reaffirmed Strong Buy Spurs Fresh Look at Valuation After Revenue Beat and EPS Miss

Old Second Bancorp (OSBC) is back in focus after Raymond James reiterated its Strong Buy rating following the bank’s appearance at the Small Cap Bank Summit and a quarter where revenue topped expectations despite an earnings per share miss.

See our latest analysis for Old Second Bancorp.

The renewed Strong Buy call comes as Old Second’s share price has quietly built momentum, with a robust 30 day share price return of 11.23 percent feeding into a 5 year total shareholder return of 122.81 percent. This suggests investors see improving growth prospects despite the recent earnings per share miss.

If this kind of steady bank story has you thinking about what else might be overlooked, now is a good time to explore fast growing stocks with high insider ownership for other compelling ideas.

With shares near record highs yet still trading at a steep discount to some intrinsic value estimates, is Old Second Bancorp a quietly undervalued compounder, or has the recent rally already priced in the next leg of growth?

Most Popular Narrative: 5.7% Undervalued

With Old Second Bancorp last closing at $20.51 versus a narrative fair value of $21.75, the gap is modest but still points to upside.

The recent Evergreen Bank acquisition is performing ahead of expectations, providing higher than expected profitability and a more favorable asset mix, which is expected to drive incremental revenue growth, strengthen net interest margin, and enhance ROA as integration is completed.

Read the complete narrative.

Want to see how one deal and a revamped margin profile could justify a richer future earnings multiple than many peers? The narrative outlines the potential growth runway, the shift in profitability, and the valuation bridge that ties these elements together. Curious which assumptions would need to hold for that upside to materialize? Read on to see the framework behind this fair value assessment.

Result: Fair Value of $21.75 (UNDERVALUED)

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

However, this upside depends on Illinois staying resilient and Old Second keeping pace digitally, as any local downturn or tech lag could swiftly challenge the thesis.

Find out about the key risks to this Old Second Bancorp narrative.

Another View: Multiples Tell a Tougher Story

Look past the modest 5.7 percent discount to fair value and the picture gets trickier. On a price to earnings basis, Old Second trades at 15.3 times earnings, materially richer than both peers at 11.4 times and the 14.5 times fair ratio the market could move toward.

That premium means even solid execution might only justify today’s price, while any stumble could see the valuation compress quickly, leaving less room for error than the narrative suggests. Is this a quality premium worth paying, or a margin of safety that has already disappeared?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Old Second Bancorp Narrative

If you see the numbers differently or would rather dig into the details yourself, you can build a complete narrative in just a few minutes: Do it your way.

A great starting point for your Old Second Bancorp research is our analysis highlighting 2 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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