Is TFSL Still Attractive to Investors After Its 10.7% Climb in 2025?

Trying to figure out the best move with TFS Financial stock? You are not alone. With its latest closing price at $13.37, this stock has made investors take notice, even if its rock-solid, slow-and-steady approach is not creating headlines every week. Over the past year TFS Financial has quietly climbed 10.7%, with a longer-term five-year return of 34.9%. The past month saw a smaller 2.5% gain, while a slight dip of 1.8% over the last week has investors wondering if there is more upside or a new risk emerging. Some of this movement mirrors broader shifts in the financial sector as investors adjust to changing expectations about interest rates and market stability.

But what about valuation? If you are hoping to spot a diamond in the rough here, the numbers might give you pause. According to standard valuation models, TFS Financial is currently undervalued in 0 out of 6 key checks, giving it a value score of just 0. So, is the stock priced just right, or is there something the metrics are missing?

Let us dig into the usual ways investors decide whether a stock like TFS Financial is good value or not. We will look at the most common valuation approaches first. Be sure to keep reading, because there is a smarter way to size up valuation that investors often overlook.

TFS Financial scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: TFS Financial Excess Returns Analysis

The Excess Returns model evaluates how effectively a company uses shareholder money by analyzing the gap between the return on invested capital and its cost of equity. For TFS Financial, this approach provides a focused look at long-term value creation rather than short-term earnings spikes.

Here is how TFS Financial measures up:

• Book Value: $6.77 per share
• Stable EPS: $0.29 per share
  (Source: Median Return on Equity from the past 5 years.)
• Cost of Equity: $0.56 per share
• Excess Return: $-0.27 per share
• Average Return on Equity: 4.27%
• Stable Book Value: $6.77 per share
  (Source: Median Book Value from the past 5 years.)

Using these figures, the model estimates an intrinsic value far below the current price. The implied discount is -756.2%, meaning the stock is significantly overvalued relative to what the Excess Returns calculation would suggest.

Result: OVERVALUED

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

Our Excess Returns analysis suggests TFS Financial may be overvalued by 756.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: TFS Financial Price vs Earnings

For profitable companies like TFS Financial, the price-to-earnings (PE) ratio is a widely used way to assess value. It tells investors how much they are paying today for every dollar of earnings, making it especially useful for banks and other companies with steady profits.

Normal or fair PE ratios are influenced by how quickly the company is expected to grow and how risky its earnings stream might be. Companies with bright growth prospects or lower risk usually command higher ratios. In contrast, slower growth or uncertain profits tend to bring the average down.

TFS Financial currently trades at a PE ratio of 45.6x. By comparison, the average PE for banks in its industry is just 11.8x, while its peer group trades around 13.7x. This puts TFSL’s valuation far above both the typical bank and similar companies in its space.

It is important to look past the simple industry and peer averages. Simply Wall St calculates a "Fair Ratio" that takes into account TFSL’s specific growth outlook, risk profile, profit margin, industry, and market cap. This approach is more nuanced than a basic comparison, since it is tailored to the company’s unique situation rather than a blanket average.

For TFS Financial, the Fair Ratio comes in at 12.4x. With the actual PE much higher at 45.6x, the stock appears significantly overvalued based on this preferred multiple approach.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your TFS Financial Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply the story you believe about a company, brought to life by your assumptions for its future revenue, earnings, margins, and the fair value you think is realistic. Rather than relying on just one estimation model, Narratives help you link a company’s story to a financial forecast, which is then compared directly to its current price to judge if it is a good buy or sell.

Narratives are easy to build and are available right on Simply Wall St’s Community page, where millions of investors share their perspectives. As new news or earnings come out, Narratives update automatically, ensuring your view is always relevant. For example, one investor’s Narrative for TFS Financial may forecast steady growth and assign a fair value above $15, while another might see limited upside and set it closer to $10. Narratives put you in control, making valuation more dynamic and tailored to your own outlook. This approach empowers smarter investment decisions every step of the way.

Do you think there's more to the story for TFS Financial? Create your own Narrative to let the Community know!

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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