Associated Banc-Corp (ASB) caught investors’ attention after its second quarter earnings presentation highlighted record net interest income and a 13% rise in commercial and industrial loans over the past year. The company’s updated guidance also points to ongoing strategic momentum.

Despite a bumpy few weeks, Associated Banc-Corp's 1-year total shareholder return stands at nearly 8%, and the five-year figure is an impressive 106%, hinting at real staying power. Recent share price weakness likely reflects shifting investor sentiment after a strong run and anticipation of how the company will deploy its commercial loan growth and credit risk innovations going forward.

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With shares trading at a meaningful discount to analyst targets and robust credit and loan growth on display, does this mark a compelling entry point for investors, or has the market already accounted for Associated Banc-Corp’s future gains?

Most Popular Narrative: 15.7% Undervalued

Based on the most widely followed narrative, Associated Banc-Corp’s fair value is estimated at $28.60 per share, compared to a last close of $24.11. This places the stock noticeably below the narrative fair value and sets the context for a valuation case built on growth and margin expansion.

The company's strategic pivot toward growing commercial and industrial (C&I) lending, replacing lower-yielding residential balances with higher-yielding, relationship-focused assets, is driving record net interest income and margin expansion. This is positioning the balance sheet for sustained profitability growth and is likely to positively impact revenue and net margins.

What is supporting this price target? The narrative leans heavily on ambitious earnings projections and a substantial jump in profit margins. Curious which numbers analysts are really betting on? Uncover the growth forecasts and profitability assumptions fueling this compelling valuation argument.

Result: Fair Value of $28.60 (UNDERVALUED)

However, any slowdown in deposit growth or an increase in credit losses in commercial lending could quickly challenge these optimistic projections for Associated Banc-Corp.

Another View: What Do Valuation Ratios Suggest?

While analyst forecasts point to Associated Banc-Corp being undervalued, valuation ratios tell a different story. The company trades at 31 times earnings, which is more expensive than both the US Banks industry average of 11.6x and the peer average of 29.2x. This large gap may signal premium expectations and introduce valuation risk if growth does not meet forecasts. Will the market continue to reward the stock, or is a re-rating due?

Build Your Own Associated Banc-Corp Narrative

If you see things differently, or want to dive into the numbers yourself, you can craft your own narrative in just a few minutes. Do it your way

A great starting point for your Associated Banc-Corp research is our analysis highlighting 3 key rewards and 3 important warning signs 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.