Is Triumph Financial’s Recent 44.9% Drop a Signal to Rethink Its True Worth?

Trying to decide what to do with Triumph Financial stock right now? You are definitely not alone. After all, this name has been making some pretty big statements lately, and not always the ones investors want to see. The stock's price has dropped by 3.9% in just the last week and a hefty 23.4% over the past month. Year-to-date, it is down 44.9% and even over the last twelve months, it has fallen 34.5%. Despite all of that, if you zoom out further, Triumph Financial is still up 21.6% over the past five years, which shows that the long game can look very different than the recent past.

Some of these moves are being driven by the market's shifting view of what financial sector stocks like Triumph can deliver in an environment that has quickly changed from low rates and easy money to something much less predictable. Investors seem to be recalibrating their expectations and weighing in new risks, whether justified or not. If you have been feeling whiplash, you are not alone, and the wild ride certainly calls for a closer look at the company's true value beneath the recent headlines.

Here's a reality check: based on our valuation framework, Triumph Financial scores a 1 out of a possible 6 for being undervalued, which means it only looks attractively priced in one category. But scores and ratios alone do not tell the whole story. Let us break down the main ways analysts and investors judge valuation, and hang on because there is a smarter, more holistic approach to understanding Triumph's worth that we will touch on at the end of this article.

Triumph Financial scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Triumph Financial Excess Returns Analysis

The Excess Returns valuation model looks at how much profit a company generates above the minimum required return on its equity. In other words, it measures whether the company creates additional value beyond just covering its cost of capital. This method is especially useful for financial firms because it highlights the actual wealth created for shareholders.

For Triumph Financial, the data from analysts suggests:

• Book Value: $36.56 per share
• Stable EPS: $1.21 per share (Source: Weighted future Return on Equity estimates from 4 analysts.)
• Cost of Equity: $2.53 per share
• Excess Return: $-1.32 per share
• Average Return on Equity: 3.24%
• Stable Book Value: $37.32 per share (Source: Weighted future Book Value estimates from 4 analysts.)

According to the model, the intrinsic value per share for Triumph based on excess returns is just $1.59. This is drastically lower than the current share price, implying an overvaluation of roughly 2975.1%.

The results make it clear that based on excess returns, Triumph Financial is not generating sufficient profits over its cost of capital to justify its current share price.

Result: OVERVALUED

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

Our Excess Returns analysis suggests Triumph Financial may be overvalued by 2975.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Triumph Financial Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics for profitable companies like Triumph Financial. It tells us how much investors are willing to pay for each dollar of earnings, making it especially useful when a business is generating ongoing profits. A higher PE can reflect expectations for strong future growth, while a lower PE may signal market doubts or higher risk.

Growth expectations and the perceived risk profile play pivotal roles in what constitutes a “normal” or “fair” PE ratio. Companies with higher anticipated earnings growth can often justify higher PE multiples. More mature or riskier businesses usually trade at lower valuations. For Triumph Financial, the current PE ratio stands at 111.45x compared to a peer average of 30.78x and an industry average of 11.80x. This places Triumph well above both its direct peers and the broader banks sector.

Instead of stopping there, it is better to consider Simply Wall St’s proprietary “Fair Ratio” metric, which for Triumph is calculated at 51.20x. The Fair Ratio is more comprehensive than industry averages or peer comparisons alone because it considers the company’s unique growth prospects, risk factors, profit margins, industry position, and market capitalization. By doing so, it gives a truer picture of what investors should reasonably pay for the stock’s earnings.

Looking at the numbers side by side, the company’s current PE ratio of 111.45x is far higher than the Fair Ratio of 51.20x. This suggests that the stock is priced at a substantial premium beyond what its fundamentals and risk profile would normally warrant, even after accounting for its growth outlook and sector dynamics.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your Triumph Financial Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is the story behind the numbers, your unique perspective on a company, encompassing your expectations for its fair value and your assumptions about future revenue, earnings, and margins.

Unlike traditional metrics, Narratives let you connect the dots between what is happening in Triumph Financial’s business and how that might play out financially. This approach helps you see how your forecast leads to your own estimate of fair value. It is not only easy to use but also accessible via the Community page on Simply Wall St’s platform, which is used by millions of investors worldwide.

With Narratives, you get a dynamic toolkit that guides buy or sell decisions by comparing the fair value you believe in against the current market price, all while automatically updating as new news or earnings reports are released. For example, one investor may see Triumph Financial’s rapid AI-driven payments innovation and project a fair value as high as $60.50. Another, focused on risk and sector headwinds, might set a fair value closer to $1.59. Both perspectives are visible and tracked as the facts change.

Do you think there's more to the story for Triumph Financial? Create your own Narrative to let the Community know!

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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