It's been a great afternoon session for First Citizens BancShares investors, who saw their shares rise 47.6% to a price of $859.84 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
First Citizens BancShares, Inc. is the parent company of First-Citizens Bank & Trust Company providing retail and business banking services to individuals, businesses and professionals. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, First Citizens BancShares has a trailing 12 month P/E ratio of 12.9 and a P/B ratio of 1.207.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
When we divideFirst Citizens BancShares's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.0, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.