Wintrust Financial (WTFC): Evaluating Valuation After Strategic Refinancing and Continued Organic Growth

Wintrust Financial (WTFC) just wrapped up a strategic refinancing to redeem preferred securities, an event that has caught investors' attention. This move complements the company's steady organic growth and sets it apart among regional banks.

See our latest analysis for Wintrust Financial.

Following the refinancing, Wintrust Financial’s solid fundamentals have kept the stock moving steadily. The share price is up 3% year-to-date, and while the 12-month total shareholder return is slightly negative, long-term investors have seen impressive gains, with a 52% three-year total return and 137% over five years. The latest developments, paired with consistent improvements in efficiency and market share, suggest sentiment remains constructive even amid changing rate environments.

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With above-average revenue growth, solid fundamentals, and a share price sitting roughly 23% below the average analyst target, the big question is whether Wintrust Financial’s current valuation signals a buying opportunity or if the market has already priced in the company’s future growth.

Price-to-Earnings of 11.6x: Is it justified?

At a price-to-earnings (P/E) ratio of 11.6x, Wintrust Financial trades just above the US Banks industry average of 11x based on the last close at $127.77. This suggests the market may be placing a premium on Wintrust compared to its direct peers.

The P/E ratio reflects how much investors are willing to pay for a dollar of the company's earnings. For banks, this is a key metric, since it incorporates not only current profitability but also expectations for future growth and stability.

While Wintrust shows strong profit growth and quality earnings, its P/E multiple is slightly above the industry average. However, it is still below the peer group average of 12.1x and the estimated fair ratio of 12x. This could suggest some headroom for re-rating if recent momentum and fundamentals persist.

Explore the SWS fair ratio for Wintrust Financial

Result: Price-to-Earnings of 11.6x (ABOUT RIGHT)

However, slowing revenue growth or a sudden shift in market sentiment could quickly put pressure on both valuation and momentum for Wintrust Financial.

Find out about the key risks to this Wintrust Financial narrative.

Another View: Discounted Cash Flow Model

While earnings multiples give a quick snapshot, our DCF model offers a deeper look at Wintrust Financial’s intrinsic value. Based on projected future cash flows, the SWS DCF model estimates fair value at $232.98, which is about 45% higher than the current share price. Does this suggest the market is missing something significant?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Wintrust Financial for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 895 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Wintrust Financial Narrative

If you want to take a different view or simply prefer hands-on analysis, you can build your own narrative using the same data in under three minutes with Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Wintrust Financial.

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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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