Cullen/Frost Bankers (CFR): Assessing Valuation as Investors Await Key Earnings Release

Cullen/Frost Bankers (NYSE:CFR) is set to announce its earnings this Thursday ahead of the market open. Investors are watching closely, as peers in regional banking have already posted results. Expectations are building for Frost’s third quarter report.

See our latest analysis for Cullen/Frost Bankers.

Shares of Cullen/Frost Bankers have slipped 4.4% in the past month and are down 7.2% so far this year, reflecting investor caution ahead of earnings and shifting sentiment across the regional banking space. Despite this recent softness, the bank’s five-year total shareholder return stands out at over 90%, highlighting its solid track record even as momentum has faded in the short term.

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With shares still trading below analyst targets and a long-term track record of returns, the question now is whether Cullen/Frost Bankers is undervalued at these levels or if the market has already priced in any future growth.

Most Popular Narrative: 9.8% Undervalued

Cullen/Frost Bankers’ most popular narrative places fair value at $136.67, just above its last close of $123.24. This creates a meaningful gap between price and perceived worth, which sets the stage for a perspective that leans bullish on the company’s long-term prospects.

The full payoff from the branch expansion strategy is approaching. Maturing branches in high-growth markets are expected to shift from breakeven to accretive by 2026, which will unlock operating leverage and drive faster bottom-line growth relative to the past three years.

Read the complete narrative.

Want a sneak peek at why this valuation stands out? The real story is a blend of anticipated earnings power and ambitious profitability assumptions. Find out what kind of growth targets and margin bets are at the heart of this forecast. Get the full breakdown behind the numbers in the narrative.

Result: Fair Value of $136.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, concentrated exposure to Texas and slower-than-expected productivity from new branches could weigh on growth, which makes the bullish outlook more challenging.

Find out about the key risks to this Cullen/Frost Bankers narrative.

Another View: Valued by Ratios, Not Just Forecasts

Taking a step back from fair value forecasts, Cullen/Frost Bankers is trading on a price-to-earnings ratio of 13.3x. That is a premium to both its industry average of 11.2x and the fair ratio of 11.9x. This suggests the stock is relatively expensive compared to peers, adding some valuation risk worth considering. Could sentiment shift if the premium narrows or the company falls short of growth expectations?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Cullen/Frost Bankers Narrative

Not convinced by consensus or want to dig into the numbers yourself? You can analyze the data and shape your own take in just a few minutes, then Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Cullen/Frost Bankers.

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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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