Cadence Bank (CADE): Assessing Valuation Following Zacks Rank #1 Upgrade and Analyst Estimate Revisions

Cadence Bank (CADE) just landed a spot on the Zacks Rank #1 (Strong Buy) List, thanks to upward revisions in analyst earnings estimates over the past two months. While analyst lists come and go, joining the Zacks top tier is often seen as a positive catalyst for stocks, drawing both individual and institutional attention. The real question is whether this fresh stamp of analyst confidence will translate into a shift in how the market values Cadence Bank going forward, or if investors have already anticipated this move.

Since the start of the year, Cadence Bank’s stock has quietly gained ground, climbing 18% over the past year with a strong 21% jump in the past three months. This build-up in momentum likely reflects both fundamental growth, as revenue and net income have been rising at double-digit percentages, and a changing perception of risk as the broader banking sector stabilizes. While the move onto the Zacks list is the latest headline, longer-term performance shows the company has delivered solid returns of over 60% in three years and has more than doubled investors’ money in five years.

With this recent upgrade fueling a short-term run, is Cadence Bank now trading below its true value, or are investors already factoring in a more prosperous future?

Most Popular Narrative: 7.9% Undervalued

According to community narrative, Cadence Bank is currently seen as undervalued, with the analysts’ fair value estimate standing higher than the present share price. This view combines an analysis of future earnings growth, profit margins, and risks to project the bank's financial trajectory.

The ongoing expansion in high-growth Sunbelt markets, particularly Texas and Georgia, continues to drive robust organic loan and deposit growth. This growth is supported by population inflows and increased business activity, which are expected to sustain revenue and net interest income improvements. Strategic investments in digital capabilities and treasury management are enhancing customer acquisition and operational efficiencies. These developments contribute to an improved efficiency ratio and support higher net margins in the future.

Interested in what is fueling this valuation call? The story focuses on significant growth initiatives and profit objectives that go beyond the latest headlines. The bank’s projections include notable assumptions about future operational efficiency and regional expansion. Want to know more about the numbers and methodologies behind this positive estimate? The full narrative highlights the catalysts and targets informing analysts' fair value assessments.

Result: Fair Value of $40.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts. However, a regional slowdown in the Texas market or lingering integration challenges from recent acquisitions could quickly shift sentiment and undermine Cadence Bank’s growth story. Find out about the key risks to this Cadence Bank narrative.

Another View: Can the DCF Model Tell a Different Story?

While analyst targets indicate Cadence Bank may be undervalued, our DCF model offers an alternative perspective on what the business is really worth based on its long-term cash flow outlook. Does this method support the optimism, or is there a twist?

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 Cadence Bank 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 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 Cadence Bank Narrative

If you have a different perspective or want to dig into the numbers for yourself, you can craft your own view in just a few minutes. do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Cadence Bank.

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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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