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International Bancshares (IBOC) Leaves An Index, Is It Too Cheap To Ignore?

Simply Wall St · 2d ago

International Bancshares (IBOC) was recently removed from a stock index, a shift that can influence trading activity as index tracking funds adjust positions and reconsider exposure to the regional bank.

Recent trading has leaned softer, with the share price down 6% over the past month and 13% over the last 90 days. Yet International Bancshares still shows a 1-year total shareholder return of 1.5% and very strong gains over three and five years, as the current pullback tempers longer term momentum.

Compare how International Bancshares' recent index exit stacks up against other regional lenders by scanning a curated set of list of solid balance sheet and fundamentals (24 results).

International Bancshares now trades at a sizeable discount to both analyst targets and intrinsic value estimates after the index exit. Is that gap compensating you for risk, or is it simply echoing excessive caution around this regional bank?

Price-to-Earnings of 9.9x: Is it justified?

The valuation gap around International Bancshares is not only about the recent index removal. On a simple earnings yardstick, the bank trades on a P/E of 9.9x against a US banks industry average of 11.5x and a peer group closer to 19.8x, even as the last close sits at $66.04.

P/E compares what investors currently pay for each dollar of earnings to what those profits represent today. For a lender like International Bancshares that reports net income of $413.3m on revenue of $837.6m and has a long operating history in Texas and Oklahoma, this ratio helps you judge how the market is pricing those earnings relative to other banks.

Earnings have grown 12.2% per year over the past 5 years, although profit growth over the most recent year was 0.3% and current net profit margins of 49.3% are below last year at 50.9%. That mix suggests the market might be assigning a lower multiple because near term growth has cooled, even though the longer multi year record and high quality earnings indicate a business that has already compounded profit over time.

The discount versus peers is clear. International Bancshares trades below both the US banks P/E average of 11.5x and its closer peer group at 19.8x, which points to a stock that the market is pricing more cautiously than many comparable lenders.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 9.9x (UNDERVALUED)

Still, the International Bancshares story could shift quickly if credit quality weakens in its Texas and Oklahoma loan book or if funding costs rise faster than earnings.

Find out about the key risks to this International Bancshares narrative.

Another View on International Bancshares' Value

The picture shifts when using the SWS DCF model for International Bancshares. In that framework, the stock at $66.04 screens as undervalued against an estimated future cash flow value of $139.71, which implies a very wide margin between price and model output.

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

IBOC Discounted Cash Flow as at Oct 2026
IBOC Discounted Cash Flow as at Oct 2026

This kind of gap can signal either a generous cushion for long term investors or a model that is too optimistic about future cash generation. Which side of that line you think International Bancshares sits on will probably decide how you treat the current pullback.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out International Bancshares 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 29 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed signals around International Bancshares can feel confusing. Review the data, weigh the context, and decide where you stand based on 3 key rewards and 2 important warning signs

Looking for more investment ideas beyond International Bancshares?

If International Bancshares has you thinking more broadly about value, do not stop here. Use focused stock lists to pressure test your thinking and spot new angles.