Dividend increase puts income focus on First Financial Bankshares (FFIN)

First Financial Bankshares (FFIN) drew fresh attention after its Board approved a second quarter cash dividend of US$0.22 per share, a 15.8% increase, scheduled for payment on July 1, 2026.

The dividend decision comes after a mixed period for the stock, with a 30 day share price return of 6.13% and a year to date share price return of 7.89%. Over the same time, the 1 year total shareholder return is a 4.89% decline, while the 3 year total shareholder return is 35.24%. This points to stronger momentum over the longer term than in the recent past.

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With revenue of US$622.099m, net income of US$263.776m and an indicated intrinsic discount of around 33%, along with only a small gap to analyst targets, you have to ask: is there genuine value here, or is the stock already pricing in future growth?

Preferred P/E of 17.5x, is it justified?

On traditional metrics, First Financial Bankshares does not look cheap, with a P/E of 17.5x against a last close of $32.39 and analyst forecasts that point to steadier rather than rapid growth.

The P/E ratio compares the share price to earnings per share and is a quick way to see how much investors are paying for each dollar of profit. For a bank like FFIN, where earnings growth is forecast at 8.84% per year and recent 1 year returns have lagged both the wider US market and the US Banks sector, a higher P/E suggests investors are paying up for perceived quality, consistency, or other qualitative strengths rather than high growth expectations.

Compared with peers, the contrast is clear. FFIN trades on a P/E of 17.5x, while both its peer group and the broader US Banks industry sit around 11.5x. Against an estimated fair P/E of 12.3x, the current multiple is also above the level the market could potentially move towards if sentiment cools or growth expectations are reassessed.

Result: Price-to-Earnings of 17.5x (OVERVALUED)

However, investors still need to watch for any reset in growth expectations or a shift in sentiment if recent share price and return trends persist.

Another view on value

While the P/E of 17.5x suggests a rich price, the SWS DCF model presents an alternative perspective, with an estimated future cash flow value of $48.53 versus the current $32.39. That 33.3% gap points to potential upside. However, it also raises the question of how much confidence investors should place in long-range cash flow estimates.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out First Financial Bankshares for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this all sounds mixed, that is the point. Use the data to stress test your own thesis and see what holds up. To understand what the market is already optimistic about, start with the 4 key rewards.

Looking for more investment ideas?

If you stop with just one stock, you risk missing other opportunities that fit your goals, so broaden your watchlist and let the numbers work for you.

• Target quality at a discount by checking companies that pass strict fundamentals filters in the 51 high quality undervalued stocks.
• Strengthen your income stream by reviewing the 12 dividend fortresses for ideas with higher yields and solid payout histories.
• Focus on resilience by scanning the 71 resilient stocks with low risk scores to spot stocks with lower risk scores that may better match your comfort level.

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.