Is F.N.B Fairly Priced After Expansion and Strong Five Year Gains?

• Ever wondered if F.N.B is trading at a fair price or if there's hidden value to uncover? You are not alone. Understanding what drives the stock's worth can make all the difference for investors looking for the next opportunity.
• In the last year, F.N.B's stock has dropped 2.2%, but it has delivered a solid 9.1% gain year-to-date and is up a remarkable 123.2% over the past five years. This suggests shifting market sentiment and possible growth potential.
• Recent headlines highlight F.N.B's expansion in the banking sector and new partnerships, fueling speculation about its long-term prospects. These moves have caught the market's attention and may have influenced the recent swings in share price.
• On our valuation scorecard, F.N.B scores 4 out of 6 for being undervalued, putting it ahead of many peers. It is worth asking not just what it is worth today, but whether there is an even better way to value it. Let’s dig into the details and see what the numbers, and a few alternative approaches, can reveal.

Find out why F.N.B's -2.2% return over the last year is lagging behind its peers.

Approach 1: F.N.B Excess Returns Analysis

The Excess Returns valuation model measures how much profit a company generates on its invested capital in excess of the minimum required return for shareholders, known as the cost of equity. This approach helps investors understand the quality and sustainability of long-term value creation beyond typical earnings numbers.

For F.N.B, the most recent data highlights a Book Value of $18.52 per share and a Stable Earnings Per Share (EPS) of $1.75, based on consensus estimates from four analysts. With a Cost of Equity of $1.43 per share, F.N.B is currently delivering an Excess Return of $0.32 per share. Its Average Return on Equity stands at a solid 8.77%, and analysts project the Stable Book Value will grow to $20.01 per share in the future, according to five contributing forecasts.

When applied, this model gives F.N.B an intrinsic value that is 43.0% higher than the current share price. This suggests the stock is significantly undervalued against its fundamentals, indicating the market may be overlooking the bank’s ability to consistently create value for shareholders beyond what is priced in today.

Result: UNDERVALUED

Our Excess Returns analysis suggests F.N.B is undervalued by 43.0%. Track this in your watchlist or portfolio, or discover 836 more undervalued stocks based on cash flows.

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

Approach 2: F.N.B Price vs Earnings

The price-to-earnings (PE) ratio is widely regarded as a reliable indicator for valuing profitable companies like F.N.B. It provides investors with a sense of how much they are paying for each dollar of earnings today, making it easy to assess whether the stock price is justified by the company’s actual performance.

Generally, higher growth prospects and lower risks can justify a higher PE ratio, while companies facing uncertainty or slow expansion tend to trade at lower multiples. That is why comparing F.N.B’s PE ratio to relevant benchmarks is so important, especially in a sector where valuations can swing with shifting economic outlooks.

F.N.B currently trades on a PE ratio of 11.23x. For context, the industry average sits at 11.08x, while the average among close peers is 14.63x. Simply Wall St’s proprietary Fair Ratio for F.N.B is calculated at 12.72x, taking into account factors like the company’s earnings growth, industry, profit margins, market capitalization, and risk profile. Unlike a simple industry or peer comparison, the Fair Ratio provides a more comprehensive, forward-looking benchmark tailored to the company’s specific circumstances.

Since F.N.B’s PE ratio is just below the Fair Ratio, and the absolute difference is less than 0.10, it suggests the stock’s valuation is about right given current fundamentals and outlook.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1406 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your F.N.B Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is simply the story or point of view you create about a company’s future, combining your expectations for revenue, profit margins, and fair value into a financial forecast that reflects your unique perspective behind the numbers.

Narratives help link what is happening in F.N.B’s real-world business, such as recent digital expansion or regional growth, directly to the figures that matter in a valuation. This shows how your assumptions could play out as a target price. They are easy to use and accessible for everyone on Simply Wall St’s Community page, where millions of investors share insights and outlooks on companies like F.N.B every day.

By comparing your fair value estimate to the current share price, Narratives empower you to make more informed buy or sell decisions based on your own conviction rather than just analyst consensus or outdated models. In addition, as markets change and fresh data emerges, Narratives stay up to date automatically so your investment thesis always reflects the latest information.

For instance, some investors see F.N.B’s fair value as high as $18.56 if digital growth delivers. Others are more cautious and set targets significantly lower due to concerns about competitive risks.

Do you think there's more to the story for F.N.B? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com