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Is Bank of N.T. Butterfield & Son (NTB) Undervalued Following Its Upcoming Earnings Focus?

Simply Wall St · 1d ago

Investor focus has turned to Bank of N.T. Butterfield & Son (NTB) ahead of its earnings report on Tuesday, with the market expecting 4.5% year-on-year revenue growth, which is slower than last year but with estimates broadly unchanged.

At a share price of US$59.91, Bank of N.T. Butterfield & Son has seen short term momentum cool slightly with a 1-day share price return that declined 0.66%. The stock is still up 20.54% on a year to date share price basis and has delivered a 1-year total shareholder return of 48.67%, pointing to strong longer term gains that investors now appear to be reassessing as they weigh the upcoming earnings update.

Scan how Bank of N.T. Butterfield & Son compares with other banks that have steady earnings expectations and firm balance sheets through our curated list of solid balance sheet and fundamentals (24 results)

After a near 49% total return over the past year and earnings expectations that now look steady rather than spectacular, the question for Bank of N.T. Butterfield & Son is whether the current valuation still leaves enough upside for new buyers.

Most Popular Narrative: 8% Undervalued

On the most followed narrative, Bank of N.T. Butterfield & Son screens on an implied fair value of $65.33 against the latest close at $59.91. This frames the current debate around how much of its fee income and M&A story is already reflected in the price.

Butterfield's planned acquisition of CIBC Caribbean for just under US$1.8b, which is expected to roughly double group assets and deposits and add more than US$400m of run rate earnings, would give the bank a larger offshore footprint that management indicates could lift long term revenue and earnings once integration is complete.

See why 9 investors see Bank of N.T. Butterfield & Son as 8% undervalued.

Result: Fair Value of $65.33 (UNDERVALUED)

Still, the narrative around Bank of N.T. Butterfield & Son could be knocked off course if ratings are cut or if expenses remain elevated for longer than planned.

Find out about the key risks to this Bank of N.T. Butterfield & Son narrative.

Next Steps

Mixed on Bank of N.T. Butterfield & Son after all this. If you want to move quickly and build your own view off the underlying data, start with the 5 key rewards and 3 important warning signs.

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