Is Peoples Bancorp a Bargain After Its Strategic Acquisition Announcement?

• Curious if Peoples Bancorp is a hidden gem or already priced in? Let’s take a closer look at what the latest numbers and analysis reveal about its value.
• The stock has moved just 0.4% over the past week and is up 3.2% in the last month, but still sits 13.3% below its price a year ago. This hints at changing investor expectations and risk sentiment.
• Recently, Peoples Bancorp announced a strategic acquisition and has been recognized for strong community banking leadership. Both events add context to its latest price changes and have caught the attention of market watchers.
• Worth noting, Peoples Bancorp currently scores a 5 out of 6 on our valuation checks, suggesting it is undervalued by several measures. We will break down these approaches next and, by the end, share an even clearer way to judge if the stock is truly trading below its worth.

Find out why Peoples Bancorp's -13.3% return over the last year is lagging behind its peers.

Approach 1: Peoples Bancorp Excess Returns Analysis

The Excess Returns model estimates a company's intrinsic value by measuring how effectively it generates profits in excess of its required cost of equity. This approach gauges both current profitability and the ability to maintain or grow those returns over time.

For Peoples Bancorp, the model highlights a Book Value of $33.86 per share and a Stable Earnings Per Share (EPS) of $3.35, based on future Return on Equity estimates from six analysts. The company's Cost of Equity is calculated at $2.58 per share, leaving an Excess Return of $0.77 per share annually. Peoples Bancorp reports an Average Return on Equity of 9.53%, with a projected Stable Book Value of $35.17, sourced from seven analysts' estimates.

Using these figures, the Excess Returns model calculates an intrinsic value for the stock that is 46.4% higher than the current price. This suggests that PEBO may be undervalued compared to its estimated true worth. Investors may not be fully considering the company’s capability to sustainably generate returns above its cost of capital.

Result: UNDERVALUED

Our Excess Returns analysis suggests Peoples Bancorp is undervalued by 46.4%. Track this in your watchlist or portfolio, or discover 886 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Peoples Bancorp.

Approach 2: Peoples Bancorp Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies like Peoples Bancorp. It serves as a simple yet effective way to relate a company’s market value to its current earnings. For businesses with consistent profits, the PE ratio offers a snapshot of how much investors are willing to pay for each dollar of earnings.

It is important to remember that what counts as a “normal” or “fair” PE ratio depends on expectations for future growth and the risks inherent in the company and its sector. A higher growth outlook or lower risk profile can justify a higher PE, while slower growth or elevated risk usually means a lower multiple is warranted.

Currently, Peoples Bancorp trades at a PE ratio of 10.1x. For context, the banking industry’s average is 11.2x, and its peer group’s average stands at 12.7x. This means PEBO trades below both benchmarks. However, Simply Wall St’s proprietary Fair Ratio model, which blends factors like earnings growth, risk, profit margins, industry conditions, and market capitalization to set an optimal PE for the company, suggests a Fair Ratio of 10.8x.

Unlike simple comparisons to industry or peers, the Fair Ratio is designed to give a clearer picture by considering the whole landscape. It takes into account Peoples’ specific financials, business quality, and unique risks. This approach removes much of the guesswork from benchmarking multiples.

With the company’s current PE of 10.1x versus the Fair Ratio of 10.8x, the stock appears modestly undervalued on this measure. This may offer investors some upside based on its fundamentals and risk-reward balance.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1410 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Peoples Bancorp Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personalized story of a company; it is where you connect your perspective on Peoples Bancorp’s future with the actual numbers behind its fair value, such as your own assumptions about future revenue, earnings, and profit margins.

A Narrative ties together the company’s business story with your financial forecast, providing a clear estimate of what you think the stock is genuinely worth. This approach is available right now on Simply Wall St’s Community page, making it quick and accessible to shape your own thesis. The same platform is used by millions of investors globally.

Narratives help you decide when to buy or sell by showing how your fair value compares to today’s share price, and they update automatically with new news or earnings results so your analysis always stays current. For example, some investors believe Peoples Bancorp’s fair value is as high as $34.17, expecting earnings to grow and margins to expand, while others see it much lower if economic or credit risks play out. Narratives ensure your investment beliefs are always grounded in up-to-date facts.

Do you think there's more to the story for Peoples Bancorp? Head over to our Community to see what others are saying!

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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