Old National Bancorp stock has delivered a strong 86.4% return over the past five years, yet several valuation checks still suggest the shares trade at a discount to an intrinsic value estimate based on the Excess Returns model.

• The 86.4% five year return indicates that long term holders have already seen substantial gains, so any perceived discount now matters more for investors thinking about adding fresh capital.
• Expectations for steady profitability and balance sheet resilience can support the valuation, while any pressure on credit quality or funding costs may challenge how much upside is left in the current price.
• Old National Bancorp screens as undervalued on multiple metrics, and the broader checks lean cheap with a high value score of 5 out of 6.

The issue now is whether Old National Bancorp's current price around US$26.67 still offers a meaningful margin between market value and the intrinsic value estimate.

Is Old National Bancorp Still Cheap on Excess Returns?

The Excess Returns model estimates Old National Bancorp's worth by comparing what it earns on equity to the return investors require. For Old National Bancorp, the inputs point to a franchise that is generating returns above its cost of equity, which is what creates intrinsic value in this framework.

The model uses a Book Value of $21.84 per share and a Stable EPS of $2.88 per share, based on weighted future Return on Equity estimates from 9 analysts. Compared with a Cost of Equity of $1.85 per share, that leaves an Excess Return of $1.03 per share, supported by an average Return on Equity of 11.89% and a Stable Book Value of $24.24 per share. These cash earning assumptions translate into an intrinsic value estimate of $50.47 per share, which is above the current price around $26.67. That gap indicates Old National Bancorp is trading at a 47.2% discount to the model's estimate.

On these Excess Returns assumptions, Old National Bancorp stock currently appears undervalued relative to its estimated intrinsic value.

Our Excess Returns analysis suggests Old National Bancorp is undervalued by 47.2%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Does Old National Bancorp Look Undervalued on Earnings?

P/E is a useful lens for Old National Bancorp because earnings and return on equity estimates are central to how investors tend to value established banks. At the current price, Old National Bancorp trades on a P/E of about 11.7x, which sits slightly below both the peer average of 12.3x and the broader Banks industry average of 12.1x.

The fair P/E ratio implied by the model is 14.5x, which is higher than where the stock trades today. That gap suggests the current market price does not fully reflect the earnings power implied by the Excess Returns assumptions and analyst inputs. For readers comparing banks on simple earnings multiples, Old National Bancorp screens on the cheaper side of its peer set and relative to this tailored fair value benchmark.

On the P/E multiple, Old National Bancorp stock appears undervalued compared with both its banking peers and the fair ratio implied by its earnings profile.

The Old National Bancorp Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where this valuation puzzle for Old National Bancorp leaves off. They spell out what would need to happen to Old National Bancorp's future growth, margins and earnings for the stock to be worth materially more or less than today's price, and sit on the Community page. Rather than a single multiple or model output, each one lays out its own set of assumptions so you can compare them with the results as they are reported.

Share a Narrative on Old National Bancorp to put your own number driven case out there and be one of the first voices in the Simply Wall St community, tracking how that view holds up as the company reports new results. It is a chance to set out your expectations on where its growth, margins and execution go from here, and see how other investors respond.

Do you think there's more to the story for Old National Bancorp? Head over to our Community to see what others are saying!

The Bottom Line

Old National Bancorp screens as undervalued on both the Excess Returns intrinsic value estimate and its current P/E multiple, which point in the same direction. The key question is whether the profitability and balance sheet assumptions embedded in that intrinsic value view hold up over time. If credit quality and funding costs stay in line with those expectations, the current discount could look appealing. If they do not, the apparent value could prove to be a value trap rather than an opportunity.

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.