Truist Financial stock has delivered a strong 3 year return, yet several valuation checks still point to the shares trading at a discount to an intrinsic value estimate based on an Excess Returns model. For investors, that mix makes Truist Financial a candidate for closer scrutiny on what is already priced into the current US$50.43 share price.
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The 89.1% return over 3 years signals that Truist Financial has already rewarded long term holders, so any perceived discount now matters more for fresh capital.
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Recent moves to expand Truist Premier and deepen advice led banking can support the investment case, while execution risks around advisor growth and competition for affluent clients may weigh on how much value the market assigns to those plans.
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On the broader checks, Truist Financial screens as cheap, with a high value score of 5 and both the intrinsic value estimate and market multiples pointing to undervaluation.
The issue now is whether Truist Financial’s current discount to intrinsic value offers enough margin of safety once the recent share price gains and business risks are taken into account.
Compare Truist Financial’s valuation story with other banks that screen as high quality and potentially mispriced by reviewing the hand picked 44 high quality undervalued stocks.
Is Truist Financial Still Cheap on Excess Returns?
The Excess Returns model estimates what Truist Financial can earn on its equity above the cost of that equity. For Truist Financial, those excess profits are a key driver of the valuation.
The model uses a Book Value of $48.04 per share and a Stable EPS of $5.06 per share. These are based on weighted future Return on Equity estimates from 13 analysts, compared with a Cost of Equity of $4.12 per share. That leaves an Excess Return of $0.94 per share, supported by an average Return on Equity of 9.80% and a Stable Book Value projection of $51.68 per share from 12 analysts. Taken together, these inputs produce an intrinsic value estimate of about $73.81 per share, which is above the current $50.43 share price and indicates the stock is 31.7% undervalued according to this model.
Because Truist is expanding Truist Premier to target mass affluent clients with more advice-led banking, the current discount suggests the market is cautious about how much of that plan will translate into sustained excess returns.
On these Excess Returns assumptions, Truist Financial stock currently screens as undervalued relative to its intrinsic value estimate.
Our Excess Returns analysis suggests Truist Financial is undervalued by 31.7%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.
