What is AMNB's Intrinsic value?

American National Bankshares Inc (AMNB) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, American National Bankshares Inc's estimated intrinsic value ranges from $34.73 to $44.74 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $34.73 -27.3%
Dividend Discount Model (Stable) $44.74 -6.3%

Is American National Bankshares Inc (AMNB) undervalued or overvalued?

With the current market price at $47.76, the stock appears to be moderately overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate American National Bankshares Inc's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.97 1.02
Cost of equity 8.3% 10.6%
Cost of debt 5.0% 5.0%
Tax rate 19.9% 20.8%
Debt/Equity ratio 0.24 0.24
After-tax WACC 7.5% 9.3%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 48.8%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.4%
  • Long-term growth rate: 4.0%
  • Fair value: $34.73 (-27.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.6% (Low) to 8.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $23 to $67
  • Selected fair value: $44.74 (-6.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $508M
Enterprise Value $630M
Trailing P/E 19.40
Forward P/E 19.03
Trailing EV/EBITDA 0.00
Current Dividend Yield 251.34%
Dividend Growth Rate (5Y) 3.84%
Debt-to-Equity Ratio 0.24

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $6.95
Dividend Discount Model (Stable) 43% $6.71
Weighted Average 100% $39.02

Investment Conclusion

Based on our comprehensive valuation analysis, American National Bankshares Inc's weighted average intrinsic value is $39.02, which is approximately 18.3% below the current market price of $47.76.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.24)
  • Historical dividend growth of 3.84%

Given these factors, we believe American National Bankshares Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.