If you are wondering whether First Horizon is still a bargain after its big run over the last few years, or if most of the easy upside has already been priced in, this breakdown is designed to help you decide.

The stock has climbed 1.9% over the last week, 5.8% over the past month, and is up 13.8% year to date, adding to an impressive 110.0% gain over the last 5 years that signals investors are increasingly comfortable with its risk profile.

Recent moves have come as regional bank sentiment has improved and investors have rotated back into financials. First Horizon is often mentioned alongside peers that are benefiting from a steadier rate outlook and healthier credit trends. At the same time, ongoing consolidation talk in the banking sector and regulatory scrutiny of larger deals are keeping a spotlight on how standalone franchises like First Horizon are valued.

Despite those gains, First Horizon only scores 2 out of 6 on our valuation checks. This means it screens as undervalued on a couple of metrics but not across the board. Next, we will unpack what different valuation approaches say about the stock, before finishing with a more holistic way to think about its true worth.

First Horizon scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

The Excess Returns model looks at how much profit a bank can generate over and above the return investors require on its equity, then capitalizes those extra profits into an intrinsic value per share.

For First Horizon, the model starts with a Book Value of $17.19 per share and a Stable EPS of $2.05 per share, based on weighted future Return on Equity estimates from 10 analysts. With an Average Return on Equity of 10.90%, the bank is expected to earn more than its Cost of Equity of $1.54 per share, resulting in an Excess Return of $0.51 per share. Analysts also expect Stable Book Value to grow to $18.80 per share, supported by forecasts from 11 analysts.

Feeding these inputs into the Excess Returns framework produces an estimated intrinsic value of about $29.10 per share. This implies the stock is trading at roughly a 21.8% discount to fair value. On this measure, First Horizon appears meaningfully undervalued rather than fully priced.

Result: UNDERVALUED

Our Excess Returns analysis suggests First Horizon is undervalued by 21.8%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for First Horizon.

For a consistently profitable bank like First Horizon, the price to earnings ratio is a useful way to judge whether the market is paying a reasonable price for each dollar of current earnings. Investors usually accept a higher PE when they expect stronger growth or see lower risk, while slower growth or higher perceived risk tends to justify a lower, more conservative multiple.

First Horizon currently trades on a PE of about 13.1x, which is above both the broader Banks industry average of roughly 11.6x and the 10.8x average of its closest peers. At first glance, that premium might imply the stock is getting a little ahead of itself. However, Simply Wall St also calculates a Fair Ratio of 12.6x, which is the PE you would expect given the company’s specific earnings growth outlook, profitability, risk profile, industry positioning and market cap.

This Fair Ratio is more informative than a simple comparison with peers or the sector because it adjusts for First Horizon’s own fundamentals rather than assuming all banks deserve the same multiple. Since the current 13.1x PE is only modestly above the 12.6x Fair Ratio, the stock looks slightly expensive but not stretched.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories investors build on Simply Wall St’s Community page to connect their view of a company’s future revenue, earnings and margins to a financial forecast and a Fair Value estimate they can compare to today’s price.

Instead of stopping at ratios like PE, a Narrative lets you spell out why you think First Horizon’s deposits, loan growth, credit quality and capital returns will evolve the way you expect. It turns that story into projected financials, and then calculates a Fair Value that updates dynamically as new news or earnings arrive.

On the platform, millions of investors use Narratives as an accessible tool to decide when to buy or sell by checking whether their Fair Value sits above or below the current share price. With First Horizon, you can quickly see how a bullish Narrative that assumes the stock should be worth around $27, given strong buybacks and M&A upside, differs from a more cautious Narrative that pegs fair value closer to $22 due to credit and strategic risks, then choose which story best fits your own view.

Do you think there's more to the story for First Horizon? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include FHN.

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