SouthState shares fell by -1.3% Friday, and are now trading at a price of $65.8. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
The Market May Be Undervaluing SouthState's Assets and Equity:
SouthState Corporation operates as the bank holding company for SouthState Bank, National Association that provides a range of banking services and products to individuals and companies. 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, SouthState has a trailing 12 month P/E ratio of 9.3 and a P/B ratio of 0.95.
When we divideSouthState's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.75, 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.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $648 | $1,138 | $1,387 | $1,645 |
| Interest Income (MM) | $504 | $826 | $1,033 | $1,336 |
| Net Margins | 28.79% | 10.6% | 34.28% | 30.16% |
| Net Income (MM) | $186 | $121 | $476 | $496 |
| Depreciation & Amort. (MM) | -$13 | -$46 | -$35 | -$33 |
| Earnings Per Share | $5.36 | $2.19 | $6.71 | $7.1 |
| EPS Growth | n/a | -59.14% | 206.39% | 5.81% |
| Diluted Shares (MM) | 35 | 55 | 71 | 76 |
| Free Cash Flow (MM) | $165 | $520 | $509 | $1,713 |
| Capital Expenditures (MM) | -$16 | -$17 | -$28 | -$18 |
| Long Term Debt (MM) | $816 | $390 | $327 | $392 |
| Net Debt / EBITDA | 1.11 | -4.32 | n/a | n/a |
SouthState has growing revenues and a flat capital expenditure trend and low leverage. The company's financial statements display positive EPS growth and generally positive cash flows. Furthermore, SouthState has average net margins with a stable trend.
