Associated Banc- (ASB) Seems Undervalued - Why Isn't It Rated as Buy?

Associated Banc- may be undervalued with poor growth indicators, but the 9 analysts following the company give it an rating of hold. Their target prices range from $19.0 to $26.0 per share, for an average of $20.78. At today's price of $17.78, Associated Banc- is trading -14.44% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. Based in Green Bay, WI, the mid-cap Finance company has 4,219 full time employees. Associated Banc- has provided a 4.7% dividend yield over the last 12 months.

Associated Banc- has a trailing twelve month P/E ratio of 7.0, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of 2.24, the company has a forward P/E ratio of 7.9.

The average compound growth rate of the company's historical and projected earnings per share is 3.2%. On this basis, the company's PEG ratio is 2.42. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 6.0%, which gives us a PEG ratio of 1.31. This shows that Associated Banc- is fairly priced.

On the other hand, the market is potentially undervaluing Associated Banc- in terms of its book value because its P/B ratio is 0.7. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -50.0% below their Graham number, indicating that its shares have a margin of safety.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $1,208 $1,257 $1,049 $1,234
Revenue Growth n/a 4.08% -16.54% 17.61%
Net Margins 27.06% 24.41% 33.46% 29.68%
Net Margins Growth n/a -9.79% 37.07% -11.3%
Earnings Per Share $1.91 $1.86 $2.18 $2.53
EPS Growth n/a -2.62% 17.2% 16.06%
Diluted Shares (MM) 162 154 152 151
Free Cash Flow (MM) $507 $495 $477 $784
FCF Growth n/a -2.3% -3.61% 64.24%
Capital Expenditures (MM) -$67 -$55 -$52 -$63
Net Debt / EBITDA 2.54 1.39 0.75 2.8
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.