Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE.
TriCo Bancshares stock has delivered a strong 74.9% return over the past three years, yet current valuation checks send mixed signals as the intrinsic value estimate points to upside while earnings multiples look less generous.
-
A 74.9% gain over three years suggests investors have already priced in a sizeable improvement in TriCo Bancshares, which raises the bar for what counts as good value today.
-
Expectations for steady profitability and cash generation can support the current share price, while any pressure on loan quality or funding costs may weigh on what investors are willing to pay.
-
The Excess Returns intrinsic value estimate indicates TriCo Bancshares may trade at a discount to fair value, yet the earnings multiple screens as expensive and the broader checks are mixed, with the company scoring 3 out of 6 on valuation .
The issue now is whether the present share price already reflects the recent gains, or if the intrinsic value estimate signals that TriCo Bancshares still offers some valuation support.
Is TriCo Bancshares a Bargain on Excess Returns?
The Excess Returns model evaluates how efficiently TriCo Bancshares uses shareholder equity to generate profit above its estimated cost of capital. For TriCo Bancshares, the inputs indicate a business priced on relatively steady profitability rather than aggressive growth.
The model uses a Book Value of $42.03 per share and a Stable EPS of $4.46 per share, with both figures sourced from weighted forecasts by 4 analysts. Against a Cost of Equity of $3.26 per share, this results in an Excess Return of $1.20 per share, supported by an average Return on Equity of 9.89% and a Stable Book Value of $45.05 per share. These steady return assumptions are used to derive an intrinsic value estimate of $78.90 per share.
When compared with the current market price, that intrinsic value suggests the stock trades at a 30.2% discount. On this model, the market price does not fully reflect the returns implied by current analyst assumptions.
On the Excess Returns view, TriCo Bancshares stock currently screens as undervalued.
Our Excess Returns analysis suggests TriCo Bancshares is undervalued by 30.2%. Track this in your watchlist or portfolio , or discover 48 more high quality undervalued stocks .
Does TriCo Bancshares Look Pricey on Earnings?
P/E works well for TriCo Bancshares because earnings are a key driver for most regional banks. On this measure, the stock trades at about 13.0x earnings, which is above the banks industry average of roughly 11.8x and below the peer group average near 24.3x. So TriCo Bancshares does not sit at the top of the peer range, but it is priced higher than the broad sector.
The fair P/E ratio from the model is 11.3x. That is lower than where TriCo Bancshares trades now, which points to a valuation premium of a little over 1.5 turns of earnings. The current multiple suggests investors are paying a higher price for each dollar of earnings than the model implies is justified, given the company's risk profile and sector backdrop.
On the P/E multiple, TriCo Bancshares stock currently screens as overvalued.
See what the numbers say about this price — find out in our valuation breakdown.
The TriCo Bancshares Narrative: What Would Justify Today's Price?
Simply Wall St Narratives for TriCo Bancshares pick up where the valuation checks leave off. They spell out which combinations of future growth, margins and earnings would make TriCo Bancshares' stock worth materially more or less than today's price, and they live on the company's Community page. Where a single ratio or model gives you one figure, Narratives describe the future that figure relies on so you can see over time whether it still holds.
You can add your voice to the Simply Wall St community by sharing a Narrative on TriCo Bancshares that lays out your number driven view on where its growth, margins and execution go from here. Set out your thesis, follow the data and see how your case holds up as new results arrive.
Do you think there's more to the story for TriCo Bancshares? Head over to our Community to see what others are saying!
The Bottom Line
TriCo Bancshares presents a split picture. The Excess Returns intrinsic value estimate points to meaningful upside, while the P/E multiple suggests the stock is already pricing in relatively full earnings expectations compared with the wider banks sector. That gap reflects different focuses, with the intrinsic view leaning on capital efficiency and steady returns, and the market multiple leaning on sentiment and what peers trade on. The key question from here is whether TriCo Bancshares can deliver the kind of stable profitability that convinces the market either to hold the current premium or to move closer to the intrinsic value estimate.
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.
Companies discussed in this article include TCBK .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
