ServisFirst Bancshares (SFBS): Assessing Valuation Following Sharp Rise in Quarterly Loan Losses

ServisFirst Bancshares (SFBS) just disclosed third quarter net charge-offs of $9 million, a sharp jump from $2.8 million in the same period last year. This signals increased loan losses that investors will want to watch closely.

See our latest analysis for ServisFirst Bancshares.

SFBS shares have traded lower in recent months, with a 30-day share price return of -13.36% and a year-to-date drop of nearly 16%. The jump in loan losses has weighed on sentiment. While the one-year total shareholder return is down over 15%, those who’ve held on long term have still seen their investment more than double in five years. Momentum has clearly faded this year, reflecting rising concerns about credit quality and future growth.

If you’re interested in broadening your investing perspective, now’s a perfect time to explore fast growing stocks with high insider ownership.

With the stock trading at a meaningful discount to analyst price targets but credit risks rising, investors have to weigh if ServisFirst Bancshares is now undervalued or if the market is simply bracing for more challenging times ahead.

Most Popular Narrative: 18.9% Undervalued

ServisFirst Bancshares closed most recently at $70.27, notably below the fair value estimated in the most popular narrative. This sets the stage for a closer look at what could drive the next major price move.

Expansion in key Southeastern markets and technology optimization support strong organic growth and sector-leading efficiency. This reinforces long-term earnings potential.

Read the complete narrative.

Want to see what’s really fueling this optimism? The analysts back up their fair value with bold growth forecasts and margin assumptions most banks would envy. The consensus view relies on rates, revenues, and profit levels you might not expect for a regional bank. Curious what underpins this strong outlook? Unpack the full story and see what’s driving the numbers behind the scenes.

Result: Fair Value of $86.67 (UNDERVALUED)

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

However, persistent credit costs or challenges in commercial real estate could quickly undermine this optimistic scenario. This would make the valuation outlook far less certain.

Find out about the key risks to this ServisFirst Bancshares narrative.

Build Your Own ServisFirst Bancshares Narrative

If you’d rather crunch the numbers yourself or believe there are other factors at play, you’re free to build your own narrative in just a few minutes. Do it your way.

A great starting point for your ServisFirst Bancshares research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Smart investors always keep an eye on where opportunity is rising. Accelerate your portfolio’s growth by checking out these unique stock themes before everyone else catches on:

• Capture income potential and steady returns with these 22 dividend stocks with yields > 3%, offering robust yields and consistent dividend growth.
• Experience the potential of next-generation computation by exploring these 28 quantum computing stocks, driving breakthroughs in quantum technology.
• Position yourself early in rapidly expanding sectors by targeting these 26 AI penny stocks, leading the way in artificial intelligence innovation.

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