Old National Bancorp (ONB) stock has drawn attention after recent trading, with the share price at US$21.43 and returns showing a 12% decline over the past month and a 6.7% decline over the past 3 months.

Looking at the bigger picture, Old National Bancorp’s recent 12.2% 1 month share price decline and 4.9% year to date share price decline contrast with a 4.5% 1 year total shareholder return. This suggests short term momentum is fading while longer term holders remain ahead.

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With Old National Bancorp trading at US$21.43, following recent declines, a value score of 4 and some implied discounts to certain estimates, should you view this as a potentially undervalued bank, or has the market already accounted for future growth in the price?

Most Popular Narrative: 21.7% Undervalued

Old National Bancorp’s most followed narrative points to a fair value of $27.38 versus the last close at $21.43, framing a sizeable valuation gap for investors to weigh.

The recently closed Bremer Bank partnership, completed ahead of schedule, has significantly expanded ONB's balance sheet and capital position, supporting both current earnings momentum and future loan growth. This positions ONB to benefit from ongoing migration and economic strengthening in its Midwest/South footprint, driving long-term revenue and EPS growth.

Curious what sits behind that gap between price and fair value, the narrative leans on robust earnings expansion, richer margins, and a higher future profit multiple baked into the model.

Result: Fair Value of $27.38 (UNDERVALUED)

However, this relies on ONB maintaining loan quality and managing its commercial real estate exposure. Any deterioration or higher provisions could quickly challenge that upbeat view.

Another Angle on Valuation

The first narrative leans on future earnings and analyst targets to argue Old National Bancorp looks cheap, yet the current P/E of 12.8x sits above both the US Banks industry at 11.2x and peers at 11.8x. It is also below a fair ratio of 16.3x, leaving you to weigh whether that gap represents more risk or opportunity.

Next Steps

Sentiment in the article so far is mixed, with both concerns and reasons for optimism, so check the numbers yourself and move quickly to weigh up the 5 key rewards and 2 important warning signs

Looking for more investment ideas?

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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.