• Wondering whether First Citizens BancShares is still offering value at around US$2,160.99 per share, or if the easy money has already been made? This article walks you through what the current price really implies.
• The stock has had a mixed run, with a 4.4% return over the last week, a 0.7% decline over the last 30 days, a roughly flat 0.1% return year to date, and a 2.2% decline over the past year, set against a very large 3 year gain and a similarly very large 5 year gain.
• Recent coverage of First Citizens BancShares has focused on its position in the US regional banking sector and how investors are reassessing large gains from prior years in light of current conditions. This context helps explain why short term moves look more muted while longer term returns remain very large.
• On our checks, First Citizens BancShares scores a 4 out of 6 valuation score. This suggests parts of the market are pricing it below some of our reference points. Next we will walk through the main valuation approaches before finishing with a different way to think about what the stock could be worth.

Approach 1: First Citizens BancShares Excess Returns Analysis

The Excess Returns model looks at how much profit a company can earn over and above the return that shareholders require on their equity, then capitalizes that stream of "extra" earnings into an estimated value per share.

For First Citizens BancShares, book value is estimated at $1,718.65 per share, with a stable book value projection of $1,944.36 per share, based on weighted future book value estimates from 8 analysts. Stable EPS is put at $203.48 per share, sourced from weighted future return on equity estimates from 10 analysts. Against a cost of equity of $162.90 per share, this implies an excess return of $40.57 per share.

The model uses an average return on equity of 10.46% to project how these excess returns might persist over time, then converts that stream into an intrinsic value estimate of about $2,760.97 per share. Compared with the recent share price around $2,160.99, this implies the stock is 21.7% undervalued on this approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests First Citizens BancShares is undervalued by 21.7%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks.

Approach 2: First Citizens BancShares Price vs Earnings

P/E is a straightforward way to look at a profitable bank because it connects what you pay for each share directly to the earnings that each share generates. In simple terms, higher growth expectations or lower perceived risk often support a higher P/E, while lower growth expectations or higher risk usually go with a lower P/E.

First Citizens BancShares currently trades on a P/E of 12.12x. That is close to the broader Banks industry average of 12.04x and below the peer group average of 19.61x. Simply Wall St also calculates a Fair Ratio for the company of 13.50x, which is the P/E it might typically trade on given factors such as its earnings profile, industry, profit margins, market cap and specific risks.

This Fair Ratio is more tailored than a simple comparison with peers or the industry, because it adjusts for company specific drivers rather than assuming all banks deserve the same multiple. With the current P/E of 12.12x sitting below the Fair Ratio of 13.50x, this approach points to the shares trading at a discount on earnings.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your First Citizens BancShares Narrative

Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives, which are simply your story about a company linked directly to the numbers you care about, like fair value and your expectations for future revenue, earnings and margins. On Simply Wall St, millions of investors build Narratives on the Community page, where each Narrative connects a company’s story to a financial forecast and then to a fair value that you can compare with the current share price to help decide whether the stock looks attractive or expensive to you. Narratives on the platform update automatically when new information such as news or earnings is added, so your fair value view can stay aligned with the latest data without extra effort. For First Citizens BancShares, one investor might set a higher fair value based on confidence in its earnings power while another might choose a lower fair value if they prefer more conservative assumptions about future profitability and risk.

Do you think there's more to the story for First Citizens BancShares? 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.