A rough start to 2022 has not knocked La Jolla, Calif.-based Silvergate Capital Corp. off its perch as the industry's most expensive stock by price-to-estimated 2022 earnings, an analysis by S&P Global Market Intelligence showed.
Silvergate's shares have dropped 18.9% so far this year, but it still traded at 36.2x its 2022 estimated EPS as of March 15, the highest premium among the 129 stocks eligible for this analysis. By comparison, the median forward price-to-earnings, or P/E, ratio for all banks in this analysis was 12.9x.
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S&P Global Market Intelligence analyzed U.S. banks that appear to be valued more as a multiple of earnings than tangible book value. To be included in this analysis, a company needs to have at least four analyst EPS estimates available for calendar year 2022. In addition, the bottom 20% of banks by price to tangible book were excluded.
Top three unchanged
The top of the table has remained unchanged since February, with Abilene, Texas-based First Financial Bankshares Inc. and Everett, Wash.-based Coastal Financial Corp. remaining the second- and third-most fully valued stocks by forward P/E ratios, respectively.
8 banks in the green so far in 2022
Among the 20 U.S. banks with the highest forward P/E ratios, eight have posted positive stock returns this year. By comparison, the S&P U.S. BMI Banks index lost 5.7% through March 15 and the S&P 500 lost 10.3%.
Oklahoma City-based BancFirst Corp., the ninth-most fully valued company in the analysis by forward P/E ratio, has posted a 14.5% return this year, the largest return among the top 20.
Meanwhile, shares in Silvergate and First Financial have trailed the banks index and the S&P 500 both year-to-date and over the last 12 months. Coastal Financial has lost slightly less ground compared to the indexes this year and has outperformed over the last 12 months.
Analysts still bullish on Silvergate
In a March 9 analyst note, B. Riley Securities Inc.'s Stephen Moss upheld a "Buy" rating on Silvergate's stock with a target price of $250 on account of the longer-term benefits that could accrue from the bank's purchase of Diem Group Ltd.'s blockchain payment network assets. Moss wrote that the potential for upside lies in the relationships the bank could make with Diem partners.
Meanwhile, Raymond James Financial gave a positive outlook for Coastal Financial in a Feb. 3 note. Analyst William Wallace IV gave the bank a "Strong buy" rating and a target price of $69 following the company's strong fourth-quarter 2021 earnings and positive momentum for its banking-as-a-service division.
