What is BXS's Intrinsic value?

BancorpSouth Bank (BXS) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, BancorpSouth Bank's estimated intrinsic value ranges from $38.07 to $45.29 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $45.29 +57.5%
Dividend Discount Model (Stable) $38.07 +32.4%

Is BancorpSouth Bank (BXS) undervalued or overvalued?

With the current market price at $28.76, the stock appears to be significantly undervalued.

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 BancorpSouth Bank'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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.11 1.14
Cost of equity 7.9% 10.2%
Cost of debt 5.0% 5.0%
Tax rate 21.5% 26.1%
Debt/Equity ratio 0.32 0.32
After-tax WACC 6.9% 8.6%

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: 29.4%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.0%
  • Long-term growth rate: 2.0%
  • Fair value: $45.29 (57.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.2% (Low) to 7.9% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $22 to $54
  • Selected fair value: $38.07 (32.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $2950M
Enterprise Value $3940M
Trailing P/E 9.84
Forward P/E 11.00
Trailing EV/EBITDA 0.00
Current Dividend Yield 298.80%
Dividend Growth Rate (5Y) 19.37%
Debt-to-Equity Ratio 0.32

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% $9.06
Dividend Discount Model (Stable) 43% $5.71
Weighted Average 100% $42.20

Investment Conclusion

Based on our comprehensive valuation analysis, BancorpSouth Bank's intrinsic value is $42.20, which is approximately 46.7% above the current market price of $28.76.

Key investment considerations:

  • Historical dividend growth of 19.37%

Given these factors, we believe BancorpSouth Bank is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.