Atlantic Union Bankshares (AUB): $126.5M One-Off Loss Challenges Bullish Margin Narratives

Atlantic Union Bankshares (AUB) delivered a 5.7% uptick in earnings over the past year, reversing a longer-term decline of 1.2% per year across the last five years. Net profit margins have narrowed to 19.8% from 26.5% a year ago, while a large one-off loss of $126.5 million over the past twelve months has weighed on reported earnings quality. Looking ahead, investors are drawn to forecasts of 42.3% annual earnings growth, which is significantly above the broader US market. There is also a projected 16.6% annual revenue growth rate that outpaces peers, though the headline valuation remains a sticking point.

See our full analysis for Atlantic Union Bankshares.

Next, we will see how these headline numbers hold up when compared with the most widely followed narratives about AUB, spotlighting where perceptions are confirmed and where surprises may challenge consensus thinking.

See what the community is saying about Atlantic Union Bankshares

Net Profit Margins Narrow to 19.8%

• Net profit margin slipped to 19.8% from 26.5% last year, reflecting tighter earnings even as revenue growth strengthened.
• According to the analysts' consensus view, rising expenses and a large $126.5 million one-off loss put pressure on profitability, somewhat offsetting management’s progress in diversifying risk and building new revenue streams.
  • The recent margin compression highlights how regional expansion and digital investments can boost future upside, but it also exposes near-term volatility if integration costs or loan performance fall short.
  • Consensus notes that the company’s focus on efficiency and digital transformation should support higher margins over time, but current metrics show the transition phase may be bumpy.

What this means for future returns could hinge on how management navigates operating costs and unlocks margin expansion over time.
📊 Read the full Atlantic Union Bankshares Consensus Narrative.

PE Ratio of 23.3x Well Above Industry Average

• Atlantic Union Bankshares is trading at a Price-To-Earnings ratio of 23.3x, significantly above US banks’ industry average of 11.2x and peer average of 12.6x.
• Consensus narrative points out that while robust earnings forecasts may justify some premium, the stock’s current multiple signals investors are already baking in much of the expected growth.
  • The analysts' consensus suggests that to hit projected price targets, the PE ratio would eventually need to fall closer to 10.5x as earnings catch up. This could mean returns will depend more on the growth materializing than on a multiple expansion.
  • This disconnect between current and forecasted PE ratios reveals investors are paying for a future that must be realized for today’s valuation to hold up.

Share Price at $34.09 Trades Below DCF Fair Value

• The current share price of $34.09 is about 23% below the company’s DCF fair value estimate of $44.51, suggesting long-term potential upside if forecasts are met.
• Analysts' consensus view highlights that management’s successful integration of recent acquisitions, improved digital banking strategy, and revenue growth position AUB to potentially close this gap as future earnings increase.
  • However, the recent 7% projected annual share count growth and lingering dilution risk could temper how quickly the market moves the stock toward fair value.
  • Ultimately, consensus says realizing this full upside relies on the execution of margin, efficiency, and growth plans, not just attractive headline multiples.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Atlantic Union Bankshares on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Atlantic Union Bankshares research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

Despite promising growth projections, Atlantic Union Bankshares faces margin compression, lofty valuation multiples, and dilution risk. These factors could limit upside if execution falters.

If you want companies trading well below their fair value with a margin of safety, check out these 877 undervalued stocks based on cash flows and see which stocks look more attractively priced.

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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