Pinnacle Financial Partners Inc (NASDAQ:PNFP) closed yesterday at $68.55, leaving some investors asking whether this price can still be justified by the high growth potential. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors. Check out our latest analysis for Pinnacle Financial Partners
Exciting times ahead?Analyst expectation from the stock’s 5 analysts is one of positive sentiment, with earnings estimated to expand from current levels of $3.279 to $4.276 over the next year. This illustrates a relatively optimistic outlook in the near term, with a relatively solid earnings per share growth rate of 30.41% over the next 1-2 years.
Is PNFP’s share price justified by its earnings growth?
PNFP is available at a PE (price-to-earnings) ratio of 20.91x today, which tells us the stock is overvalued based on current earnings compared to the banks industry average of 16.93x , and overvalued compared to the US market average ratio of 20x .
We understand PNFP seems to be overvalued based on its current earnings, compared to its industry peers. But, since Pinnacle Financial Partners is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. Based on Pinnacle Financial Partners’s predicted 30.41% growth in earnings next year and PE ratio of 20.91x we see that Pinnacle Financial Partners has a very low PEG ratio of 0.54x. This tells us that when including its growth in our analysis Pinnacle Financial Partners’s stock can be considered relatively cheap , based on its fundamentals.
What this means for you:
Are you a shareholder? If your personal research into the stock confirms what the PEG ratio is telling you, it might be a good time to add more of PNFP to your portfolio. Nonetheless, prudent investors should never overlook intrinsic valuation models either. Take a look at what valuation our discounted cash flow model is yielding.
Are you a potential investor? If you are considering investing in PNFP, looking at the PEG ratio on its own is not enough to make a well-informed decision. You will benefit from looking at additional analysis and considering its intrinsic valuation along with other relative valuation metrics like P/E and EV/Sales. Click here to for a more in-depth analysis on these metrics.