Dividend actions put Old National Bancorp in focus

Old National Bancorp (ONB) is back on investors’ radar after the bank declared quarterly cash dividends on both its common stock and its 7.0% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A and Series C.

Alongside the latest dividend declarations, Old National Bancorp’s share price has been firm, with a 90 day share price return of 17.36% and a year to date share price return of 20.49%. The 1 year total shareholder return of 29.22% and 5 year total shareholder return of 90.07% point to momentum that has built over a longer period.

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After the strong recent share price run of Old National Bancorp and its ongoing dividends, the key issue now is whether the current valuation still offers a margin of safety for new buyers or is better suited to existing holders.

Most Popular Narrative: 7.2% Undervalued

Old National Bancorp’s most followed valuation narrative pegs fair value at $29.27, compared with the recent close of $27.17, which puts the dividend story against a backdrop of implied upside.

ONB's strong performance in expanding its fee-based businesses (wealth, mortgage, and capital markets) and well-controlled expenses, along with increasing organic noninterest income, are supported by the demographic shift of the aging U.S. population, which is likely to further boost demand for wealth management and trust services, generating higher recurring revenue and improving earnings stability.

This narrative does not just hinge on dividends. It leans on a detailed earnings path, shifting revenue mix and a future profit margin profile that has been carefully modeled rather than guessed.

Result: Fair Value of $29.27 (UNDERVALUED)

However, Old National Bancorp’s story could change if commercial real estate credit costs rise, or if tighter loan growth limits the revenue needed to support this valuation narrative.

Next Steps

If the balance of optimism and concern around Old National Bancorp feels finely poised, now is a good time to review the data yourself and then weigh the 5 key rewards and 1 important warning sign

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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.