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German American Bancorp (GABC): Rethinking Valuation After a Big Revenue Beat and Strong Tangible Book Performance

Simply Wall St · 2d ago

German American Bancorp (GABC) just turned heads with quarterly revenue of $94.15 million, up 51% year on year and topping expectations, alongside a beat on tangible book value per share estimates.

See our latest analysis for German American Bancorp.

The upbeat quarter comes after a steadier year in the market, with the latest share price at $40.89 and a positive year to date share price return suggesting momentum is gradually rebuilding, even as the 1 year total shareholder return remains slightly negative and longer term total shareholder returns are still comfortably positive.

If this earnings beat has you rethinking your bank holdings, it might also be a good moment to scan for other financial names with strong fundamentals via solid balance sheet and fundamentals stocks screener (None results).

With earnings surging, a double digit discount to analyst targets, and valuation models implying the shares trade well below intrinsic value, is German American Bancorp quietly undervalued, or is the market already baking in its next leg of growth?

Price-to-Earnings of 15.3x: Is it justified?

German American Bancorp trades on a 15.3x price to earnings ratio at $40.89, a premium to both peers and our fair value benchmark for its earnings.

The price to earnings multiple compares what investors pay for each dollar of current earnings, a key yardstick for mature, profitable banks where income stability matters as much as growth.

At 15.3x, the stock changes hands at a higher earnings multiple than the estimated fair price to earnings ratio of 12.8x. This implies the market is assigning extra value to its recent profit acceleration and expected double digit earnings growth, even though our DCF work suggests the shares already trade around 44% below intrinsic value.

That premium stands out more starkly when set against the US Banks industry average price to earnings of 11.9x and a peer group around 12.7x. This means investors are paying noticeably more for each dollar of GABC earnings than for comparable banks, a gap that could narrow if sentiment or growth expectations cool.

Explore the SWS fair ratio for German American Bancorp

Result: Price-to-earnings of 15.3x (OVERVALUED).

However, this upbeat story could unravel if credit quality deteriorates or loan growth slows, which could pressure margins and undermine those optimistic earnings expectations.

Find out about the key risks to this German American Bancorp narrative.

Another View: What Does Our DCF Say?

While the current 15.3x earnings multiple looks rich, our DCF model tells a very different story, suggesting fair value closer to $73.43, or about 44% above today’s $40.89 share price. Is the market mispricing long term cash flows, or is the DCF too optimistic?

Look into how the SWS DCF model arrives at its fair value.

GABC Discounted Cash Flow as at Dec 2025
GABC Discounted Cash Flow as at Dec 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out German American Bancorp for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own German American Bancorp Narrative

If you would rather dig into the numbers yourself and challenge these assumptions, you can quickly build a personalized view in just minutes with Do it your way.

A great starting point for your German American Bancorp research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.