A Fresh Look at KeyCorp (KEY) Valuation as Shares Gain 4% Over the Past Month

KeyCorp (KEY) shares have been quietly trending upward over the past month, posting gains of about 4%. This gradual move has caught the attention of investors who have been watching the bank’s performance since the start of the year.

See our latest analysis for KeyCorp.

KeyCorp's share price momentum seems to be quietly improving, with a solid 8% gain year-to-date. The company has weathered recent volatility, and while the 1-year total shareholder return is still slightly negative, those who held over the past three years have seen returns rebound over 14%. This combination of gradual gains and a strong longer-term track record could signal shifting sentiment around the bank's outlook and perceived risks.

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Given those gains and KeyCorp’s robust financial results, the big question now is whether the stock remains undervalued or if recent optimism means the market has already factored in all the potential upside.

Most Popular Narrative: 14.5% Undervalued

According to the most widely followed narrative, KeyCorp’s fair value is estimated to be $21.51, about $3 above its last close of $18.40. This sets expectations for potential further upside and frames bullish analyst forecasts.

Expansion in the wealth management and commercial payments sectors, marked by record production volumes and significant client growth, is poised to drive noninterest income upwards. This may influence both revenue and net margins positively. Strong growth in the national third-party commercial loan servicing business provides a counter-cyclical revenue stream and insights into the commercial real estate market, which could bolster diversified revenue streams and enhance earnings stability.

Read the complete narrative.

Wondering why analysts see room for shares to climb? The secret mix driving this target blends ambitious growth in profit margins and revenue with a future profit multiple that is unusual for banks. Ready to uncover how aggressive expansion bets and shifting earnings expectations fuel this valuation? Dive into the numbers behind the story to see exactly what is moving the target higher.

Result: Fair Value of $21.51 (UNDERVALUED)

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

However, a rise in nonperforming loans or weaker loan demand could quickly challenge the positive outlook that currently supports KeyCorp’s bullish narrative.

Find out about the key risks to this KeyCorp narrative.

Another View: Market Ratios Tell a Different Story

While our initial analysis suggests KeyCorp is undervalued, the market’s most-used ratio paints a more cautionary picture. KeyCorp trades at 21.6 times earnings, which is significantly higher than the 11.4 times for the US Banks industry and above its own fair ratio of 17.5. This could indicate valuation risks if those multiples begin to revert.

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

Build Your Own KeyCorp Narrative

If you see things differently, or prefer to dig into the numbers on your own terms, you can easily build a personal view in just a few minutes. Do it your way

A great starting point for your KeyCorp research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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