Is Now a Good Time to Reconsider SouthState Bank After a 10.9% Share Price Drop?

• Are you wondering whether SouthState Bank's stock could offer good value right now? You're not alone, especially with so much attention focused on the banking sector.
• After a 61.0% gain over five years, SouthState Bank's share price has slipped recently, down 2.0% for the week and 10.9% over the past month. This has made many investors rethink both its growth story and current risks.
• Headlines have circulated around the regional banking space as interest rate uncertainties and regulatory updates hit the news. These developments have sparked both caution and curiosity among those watching SouthState and its peers, adding more layers to what is driving the latest price moves.
• On the valuation front, SouthState Bank scores a 4 out of 6 on our undervaluation checks, giving it a promising but not perfect profile. Let's look at the major valuation approaches and, before we wrap up, explore an additional angle for thinking about what the stock is actually worth.

Find out why SouthState Bank's -7.6% return over the last year is lagging behind its peers.

Approach 1: SouthState Bank Excess Returns Analysis

The Excess Returns model evaluates a bank by looking at how much profit it generates above the cost of its equity capital. Simply put, this approach asks whether SouthState Bank can consistently earn more from its investments than it costs to fund them. This is an important signal of long-term value creation for shareholders.

For SouthState Bank, key numbers from the Excess Returns approach include a Book Value of $89.14 per share and a Stable EPS of $9.75 per share. These estimates are based on weighted future Return on Equity numbers from 9 analysts. The Cost of Equity is $8.08 per share, which means the bank’s Excess Return stands at $1.66 per share. The average Return on Equity is 9.91%, with a Stable Book Value forecast of $98.30 per share, reflecting input from 10 analysts.

Given these figures, the model estimates SouthState Bank’s intrinsic value at $130.68 per share. With the current market price implying a 32.6% discount to intrinsic value, the Excess Returns analysis suggests the stock is significantly undervalued at present.

Result: UNDERVALUED

Our Excess Returns analysis suggests SouthState Bank is undervalued by 32.6%. Track this in your watchlist or portfolio, or discover 831 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 SouthState Bank.

Approach 2: SouthState Bank Price vs Earnings

For established banks like SouthState Bank that report steady profits, the Price-to-Earnings (PE) ratio is a practical way to judge valuation. This metric helps investors see how much they are paying for each dollar of the company’s earnings, which is particularly useful when those earnings are both consistent and predictable.

While a “normal” or “fair” PE ratio can vary, it typically reflects expectations about future growth and potential risks. Higher growth prospects or lower risks can justify a higher PE, while companies with less impressive outlooks or more uncertain prospects may warrant a lower PE.

Currently, SouthState Bank trades at a PE ratio of 12.8x. This is slightly above the industry average of 11.2x and the average for similar peers at 12.0x. In addition, Simply Wall St’s proprietary Fair Ratio stands at 15.0x, which is specifically tailored to SouthState by factoring in its expected earnings growth, risk profile, profit margins, industry positioning, and market cap.

Unlike broad industry averages or simple peer comparisons, the Fair Ratio offers a more nuanced benchmark because it considers elements unique to each company rather than relying on generic groupings. In SouthState Bank’s case, its actual PE ratio is well below the Fair Ratio. This suggests that the market may be overlooking some positives built into the business.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1394 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SouthState Bank Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply the story behind your numbers. It connects your perspective on a company, including your assumptions for future revenue, earnings, and margins, to a financial forecast and ultimately a fair value estimate.

Narratives allow you to link SouthState Bank’s latest developments with your own expectations, bringing together everything that could affect its valuation into one easy-to-follow story. On Simply Wall St’s Community page, you can access Narratives in just a few clicks. It is a dynamic tool embraced by millions of investors worldwide to help decide if it’s time to buy, hold, or sell by comparing Fair Value to the current Price.

Because Narratives are updated instantly as new information comes in, whether that is company news or earnings reports, they always stay relevant. For example, one investor tracking SouthState Bank’s expansion into high-growth markets and technological improvements might model strong earnings growth and see a Fair Value of $116 per share. Another, more cautious investor, might focus on commercial real estate risks and set Fair Value as low as $101. Narratives make it easy to see how different stories lead to different estimates and investment decisions.

Do you think there's more to the story for SouthState Bank? 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.

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