Great Western Bancorp (GWB:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Great Western Bancorp(GWB:NYS)

Financial Services:Banks-Regional-US

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$37.32 (USD) 28/11/2018

Weighted Valuation
$42.88 (USD)

Overall Rating
Undervalued by 14.9%

Valuation Models Analyst Consensus: $44.50 (USD)
(in order of importance) Adjusted Book Value: $39.06 (USD)
Comparables: $45.68 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (GWB:NYS USD)

Price 37.32
Range 37.01 – 37.97
52 week 34.00 – 45.46
Open 37.65
Vol / Avg. 697229/500079
Mkt cap 2.15B
P/E 13.98
Div/yield 0.90/0.03
EPS 2.67
Shares 57.67M
Beta 0.00

Company Description

Great Western Bancorp, Inc. is a bank holding company. The company principally operates through its wholly owned subsidiary, Great Western Bank. The bank is a full-service regional bank focused on relationship-based banking and agri-business banking primarily in the Midwest, as well as the Southwest region of the United States. The bank’s strategy does not emphasize building specific lines of business or geographic segments but instead prefers to work as an integrated unit providing customized solutions for its customers. The company, therefore, reports only through one segment. A plurality of its loan portfolio is in commercial real estate, followed by agricultural loans. The vast majority of the company’s net revenue comes from net interest income.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for GWB:NYS

Using a discounted cash flow model we generated an intrinsic value of $28.63 (USD) for GWB:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

GWB:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $28.63 1% 5% 1% 5%
WACC (or Ke) 12.92 $31.81 $26.03
Terminal Growth Rate 3.00 $26.47 $31.27
Tax Rate 0.32 $30.76 $26.50
Cash Flow 266,253,716 $27.16 $30.10
Capital Expenditures -5,540,800 $28.60 $28.66
Long Term Debt 0 $28.63 $28.63

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $45.68 (USD) for GWB:NYS. We also generated a valuation of $47.28 (USD) using other metrics and comparables.
The comparable companies were Eagle Bancorp (EGBN:NAS), First Merchants (FRME:NAS), Hope Bancorp (HOPE:NAS), Independent Bank (INDB:NAS) and Wesbanco (WSBC:NAS).

Company GWB:NYS End Date Value
Earnings/Share $2.67 (USD)
Book Value/Share $30.84 (USD)
Sales/Share $8.03 (USD)
Cash Flow/Share $3.39 (USD)
EBITDA/Share $5.20 (USD)
Price Based on Comps Adjustment Factor (%)
$42.79 (USD) -26.1
$48.22 (USD) 6.8
$39.28 (USD) 82.7
$33.79 (USD) -31.0
$0.00 (USD) 0.0
GWB:NYS Ratios Used Average Values EGBN:NAS FRME:NAS HOPE:NAS INDB:NAS WSBC:NAS
14.10 PE Ratio 16.02 14.29 16.45 12.17 20.64 16.57
1.19 PB Ratio 1.56 1.65 1.54 0.98 2.21 1.44
4.56 PS Ratio 4.89 5.15 5.21 3.49 6.04 4.55
10.81 PCF Ratio 11.88 10.43 13.60 9.08 14.47 11.81
0.00 EV to EBITDA 0.00 0.00 0.00 0.00 0.00 0.00

Multiples

Using a multiples approach we generated a valuation of  $40.26 (USD) for GWB:NYS

Company GWB:NYS End Date Value
Earnings/Share $2.67 (USD)
Book Value/Share $30.84 (USD)
Sales/Share $8.03 (USD)
Cash Flow/Share $3.39 (USD)
EBITDA/Share $5.20 (USD)
Price Based on Comps Adjustment Factor
$42.66 (USD) 0
$38.61 (USD) 0
$39.65 (USD) 0
$36.48 (USD) 0
$43.89 (USD) 0
Ratios Ratio Average
PE Ratio 15.98
PB Ratio 1.25
PS Ratio 4.94
PCF Ratio 10.76
EV to EBITDA 8.43

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  GWB:NYS for the last 4 years was  1.25

We ran the Adjusted Book Value for  GWB:NYS and generated a book value of  $31.24 (USD)
By multiplying these we get an adjusted valuation of  $39.06 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for GWB:NYS. The 2 analysts have a concensus valuation for GWB:NYS for 2019 of $44.50 (USD).

GWB:NYS Great Western Bancorp

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 0 0 5.0000 Buy 2018-11-27

Current Price: 37.32 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 3.24 3.30
# EPS Analysts 3 1
Mean Revenue 608.00 527.70
# Revenue Analysts 2 1
Mean Target Price 44.50
Mean Cash Flow
Mean EBITDA
Mean Net Income 191.00 196.10
Mean Debt Outstanding
Mean Tax Rate 23.80 23.50
Mean Growth Rate 9.00
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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