• If you are wondering whether LendingClub's share price still lines up with its fundamentals, you are not alone. This article focuses squarely on what the current price might imply about value.
• With the stock at US$20.16 and returns of 0.9% over 7 days, 1.3% over 30 days, 5.4% year to date, 30.7% over 1 year and 99.6% over 3 years, many investors are asking how much of the story is already in the price.
• Recent attention on LendingClub has been shaped by ongoing discussion around its role in diversified financials and how investors are weighing platform based lenders against more traditional peers. These themes help frame why the current share price and past returns are getting a closer look from investors assessing risk and opportunity.
• LendingClub currently has a valuation score of 2 out of 6, based on how many checks suggest the stock is undervalued. Next we will walk through the main valuation methods behind that score before finishing with a broader way to think about what value really means for this business.

LendingClub scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: LendingClub Excess Returns Analysis

The Excess Returns model looks at how much value a company can create above the return that shareholders are asking for. Instead of focusing on near term earnings alone, it compares LendingClub’s expected profitability on its equity base to the cost of that equity.

For LendingClub, book value is $12.68 per share and the stable book value estimate is $16.26 per share, based on weighted future book value estimates from 6 analysts. The model uses a stable EPS of $2.23 per share, sourced from weighted future return on equity estimates from the same 6 analysts, and an average return on equity of 13.70%.

The cost of equity is $1.27 per share, so the model estimates an excess return of $0.96 per share, which is the value created after covering that equity cost. When those excess returns are projected forward and discounted back, the model arrives at an intrinsic value of about $37.31 per share.

Compared with the current price of US$20.16, this implies the stock is 46.0% undervalued according to this approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests LendingClub is undervalued by 46.0%. Track this in your watchlist or portfolio, or discover 886 more undervalued stocks based on cash flows.

Approach 2: LendingClub Price vs Earnings

For a profitable company like LendingClub, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. It ties the share price directly to the business’s ability to generate profit, which is what ultimately supports shareholder returns over time.

What counts as a “normal” or “fair” P/E depends on how investors view growth potential and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually point to a lower one. LendingClub currently trades on a P/E of 22.38x, compared with the Consumer Finance industry average of 9.01x and a peer average of 6.14x, so the stock is priced at a higher earnings multiple than these broad groups.

Simply Wall St’s Fair Ratio for LendingClub is 21.30x. This is a proprietary estimate of what the P/E might be based on factors such as earnings growth expectations, industry, profit margins, market cap and company specific risks. Because it blends these elements, the Fair Ratio can be more tailored than a simple comparison with industry or peer averages. With the current P/E at 22.38x and a Fair Ratio of 21.30x, the stock screens as slightly overvalued on this metric.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your LendingClub Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories you create about LendingClub that connect your view of its products, risks and competitive position to a financial forecast, and then to a Fair Value that you can easily compare with the current share price. This all takes place within the Narratives section of Simply Wall St’s Community page, which updates as new news or earnings arrive. One investor might build a more optimistic LendingClub Narrative that lines up with a Fair Value around US$22.45, while another might lean closer to the lowest analyst price target of US$15.50. By seeing these different stories side by side, you can quickly judge which assumptions feel more realistic for you and whether the current price of US$20.16 looks attractive or stretched against the Fair Value you believe in.

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