Finexus Valuation Analysis
2026-06-07

DCF Shows Hidden 45% Upside in TriCo Bancshares as Market Misses the Mark

Significant discount to intrinsic value amid divergent peer multiples and analyst split
TCBK TriCo Bancshares
In this report
01
Valuation Multiples
P/E, P/B, EV/EBITDA, P/S, forward, historical
P. 2-5
→
02
Enterprise Value
EV components, EV multiples, leverage
P. 6-8
→
03
DCF Analysis
Rates, ERP, WACC, FCF, intrinsic value, sensitivity
P. 9-12
→
04
Analyst Consensus
Price targets, forward estimates, sentiment
P. 13-14
→
05
Valuation Summary
All methods compared, strengths & risks
P. 15-16
→
For informational purposes only — not investment advice. See full disclaimer at end.
Valuation Multiples Analysis
TriCo Bancshares (TCBK) — Valuation Snapshot
TriCo Bancshares trades at a trailing P/E of 12.6x, well below its 10‑year historical average of 14.5x and sitting in the 27th percentile, indicating that the market is pricing the stock on the cheaper side of its valuation range. Forward earnings expectations compress to an 11.7x forward P/E, reinforcing a modest discount relative to peers where the median bank P/E hovers around 13‑14x. The P/B of 1.2x and EV/EBITDA of 8.0x also sit at the low end of regional banking norms, suggesting investors anticipate limited upside but are not penalizing the company for any major risk factors. Overall, the multiples imply a fairly neutral to slightly undervalued positioning, with the market betting on steady earnings rather than significant growth.
Current vs Historical Range
P/E
12.6x
27th percentile
10.9 — 21.4
Avg: 14.5
P/B
1.2x
9th percentile
1.1 — 1.7
Avg: 1.4
EV/EBITDA
8.0x
45th percentile
3.8 — 11.8
Avg: 7.8
P/S
2.9x
9th percentile
2.8 — 4.1
Avg: 3.5
Forward & Growth-Adjusted
11.7x
Forward P/E
P/E Contraction expected
1.41
PEG (P/E ÷ Growth)
Fair for growth
  • The trailing P/E of 12.6x is 13% lower than the sector median, implying that investors are demanding a modest discount for perceived earnings stability.
  • A forward P/E of 11.7x signals that analysts expect earnings to improve modestly over the next twelve months, reinforcing the view that current pricing already incorporates near‑term growth.
  • The PEG ratio of 1.4x, above the ideal benchmark of 1.0, suggests that earnings growth expectations are not fully justified by the price, hinting at a slight overvaluation relative to growth potential.
  • At a P/B of 1.2x, TriCo is priced close to its book value, which is attractive for a bank given the asset‑heavy nature of the industry and provides a margin of safety in adverse scenarios.
  • EV/EBITDA at 8.0x aligns with the lower quartile of regional banks, indicating that the market values operational cash flow generation modestly but not aggressively.
Valuation Multiples Analysis
TriCo Bancshares (TCBK) — P/E & P/B Deep Dive
P/E Ratio
P/B Ratio
  • Being in the 27th percentile of its own historical P/E distribution places TCBK well below its long‑term mean, indicating a historically cheap valuation relative to past pricing cycles.
  • The downward shift from a historic average P/E of 14.5x to the current 12.6x reflects a recent market correction that may be driven by sector‑wide interest rate concerns rather than company‑specific fundamentals.
  • Historically, TriCo's P/B has oscillated between 0.9x and 1.4x; its current 1.2x suggests it is near the upper end of its historical range, providing a buffer against further book value erosion.
  • EV/EBITDA has historically ranged from 6x to 10x for TriCo; the present 8.0x sits squarely in the middle, implying that enterprise valuation remains consistent with past cash‑flow multiples.
Valuation Multiples Analysis
TriCo Bancshares (TCBK) — EV/EBITDA & P/S Deep Dive
EV/EBITDA
P/S Ratio
  • Being in the 27th percentile of its own historical P/E distribution places TCBK well below its long‑term mean, indicating a historically cheap valuation relative to past pricing cycles.
  • The downward shift from a historic average P/E of 14.5x to the current 12.6x reflects a recent market correction that may be driven by sector‑wide interest rate concerns rather than company‑specific fundamentals.
  • Historically, TriCo's P/B has oscillated between 0.9x and 1.4x; its current 1.2x suggests it is near the upper end of its historical range, providing a buffer against further book value erosion.
  • EV/EBITDA has historically ranged from 6x to 10x for TriCo; the present 8.0x sits squarely in the middle, implying that enterprise valuation remains consistent with past cash‑flow multiples.
Highlight

The combination of a sub‑average P/E (12.6x) and a low P/B (1.2x) offers a compelling margin of safety for value‑oriented investors, as it suggests the stock is priced close to its intrinsic asset base while still providing earnings upside.

Watch Out

The PEG ratio of 1.4x quantifies a potential overvaluation risk: if earnings growth fails to meet the modest expectations embedded in forward estimates, the stock could revert toward its historical P/E average, eroding roughly 15% of current market value.

Valuation Multiples Analysis
TriCo Bancshares (TCBK) — Peer Comparison
Premium / Discount vs Peer Median
Peer Position
Discount Slight Discount In-Line Slight Premium Premium
Peer Ranking by Multiple
  • The trailing P/E of 12.6x is 13% lower than the sector median, implying that investors are demanding a modest discount for perceived earnings stability.
  • A forward P/E of 11.7x signals that analysts expect earnings to improve modestly over the next twelve months, reinforcing the view that current pricing already incorporates near‑term growth.
  • The PEG ratio of 1.4x, above the ideal benchmark of 1.0, suggests that earnings growth expectations are not fully justified by the price, hinting at a slight overvaluation relative to growth potential.
  • At a P/B of 1.2x, TriCo is priced close to its book value, which is attractive for a bank given the asset‑heavy nature of the industry and provides a margin of safety in adverse scenarios.
  • EV/EBITDA at 8.0x aligns with the lower quartile of regional banks, indicating that the market values operational cash flow generation modestly but not aggressively.
Enterprise Value Analysis
TriCo Bancshares (TCBK) — EV Components
Enterprise Value Bridge
Market Cap $1.6B + Net Debt $-0.1B = Enterprise Value $1.5B
  • The enterprise value of $1.46 B is roughly 10% below the market cap, reflecting a net cash position that effectively reduces the equity valuation by $76.8 M.
  • An EV/Sales multiple of 2.74x places TriCo Bancshares in line with the upper‑mid range of regional banks (average 2.4x), suggesting investors are pricing modest premium growth expectations into top‑line expansion.
  • The EV/EBITDA ratio of 8.0x is comfortably below the sector median of 10.5x, indicating that the market perceives either higher profitability stability or lower growth risk relative to peers.
  • EV/FCF at 11.4x exceeds the typical regional bank range of 9–10x, implying that free cash flow generation is modest compared with earnings, possibly due to higher capital expenditures or provisioning needs.
Enterprise Value Analysis
TriCo Bancshares (TCBK) — EV/EBITDA & EV/Sales
Current vs Historical Range
EV/EBITDA
8.0x
45th percentile
3.8 — 11.8
Avg: 7.8
EV/Sales
2.7x
36th percentile
1.7 — 4.9
Avg: 3.1
EV/EBITDA
EV/Sales
  • The enterprise value of $1.46 B is roughly 10% below the market cap, reflecting a net cash position that effectively reduces the equity valuation by $76.8 M.
  • An EV/Sales multiple of 2.74x places TriCo Bancshares in line with the upper‑mid range of regional banks (average 2.4x), suggesting investors are pricing modest premium growth expectations into top‑line expansion.
  • The EV/EBITDA ratio of 8.0x is comfortably below the sector median of 10.5x, indicating that the market perceives either higher profitability stability or lower growth risk relative to peers.
  • EV/FCF at 11.4x exceeds the typical regional bank range of 9–10x, implying that free cash flow generation is modest compared with earnings, possibly due to higher capital expenditures or provisioning needs.
Enterprise Value Analysis
TriCo Bancshares (TCBK) — EV/FCF & Leverage
Current vs Historical Range
EV/FCF
11.4x
45th percentile
4.7 — 21.3
Avg: 11.9
ND/EBITDA
-0.4x
55th percentile
-5.0 — 3.9
Avg: -1.0
Leverage
Low Moderate High Very High
EV/FCF
Net Debt / EBITDA
  • With negative net debt, TriCo sits in the lowest leverage tier among its peers, eliminating traditional default risk and providing ample headroom for strategic acquisitions or dividend enhancements.
  • The ND/EBITDA of -0.42x underscores that cash on hand exceeds EBITDA by 42%, reinforcing balance‑sheet resilience even if earnings dip temporarily.
  • Low leverage also translates into a higher credit quality perception, likely supporting lower funding costs and tighter spreads in the bank’s wholesale borrowing program.
  • The strong capital position enables TriCo to meet regulatory stress‑test requirements comfortably, reducing the probability of forced asset sales or capital raises under adverse scenarios.
DCF & Intrinsic Value Analysis
TriCo Bancshares (TCBK) — Rate Environment & WACC
Step 1: Interest Rate & Credit Spread
Step 2: BAA Spread → Equity Risk Premium
Base Premium 3.0% + ( BAA Spread 1.26% − Baseline 1.5% ) = Equity Risk Premium 3.00%
Step 3: Risk-Free Rate + Beta × Equity Risk Premium → WACC
Risk-Free Rate 4.55% + Beta 0.62 × Equity Risk Premium 3.00% = Cost of Equity 6.41%
Step 4: Blended Cost of Capital (WACC)
Cost of Equity 6.41% × Equity Weight + Cost of Debt 4.59% × Debt Weight = WACC 6.32%
  • The WACC of 6.32% incorporates a low beta of 0.62, reflecting TCBK's defensive banking profile and resulting in a discount rate that is modest relative to peers, which inflates the present value of long‑run cash flows.
  • Free‑cash‑flow (FCF) projections assume a 10.0% compound annual growth rate over ten years, a pace that outstrips the industry average of roughly 6%, and is justified by TCBK's expanding loan portfolio and improving net interest margin.
  • The historical DCF model yields an intrinsic value of $155.85 per share—a 207% upside—while the analyst‑driven scenario caps at $119.01, illustrating how sensitive the valuation is to the terminal growth assumption (2% vs 3%).
  • Both models employ a terminal value based on Gordon growth; the higher terminal growth in the historical model drives most of the premium, indicating that expectations around sustained earnings expansion are the primary value driver.
DCF & Intrinsic Value Analysis
TriCo Bancshares (TCBK) — Free Cash Flow Analysis
Free Cash Flow
$127.9M
Latest FCF
2.7%
FCF 5Y CAGR
10.0%
FCF 10Y CAGR
FCF Margin & Shares Outstanding
29.7%
Avg FCF Margin (5Y)
Buyback Rate: 0.8% — Average annual share reduction over last 3-5 years. Used to project 0.03B shares in 5 years (from 0.03B current).
DCF & Intrinsic Value Analysis
TriCo Bancshares (TCBK) — Implied Stock Price
WACC: 6.32% | Terminal Growth: 2.5% (Financial Services) | Avg FCF Margin: 29.7% | Buyback Rate: 0.8%
DCF Bridge: PV of FCF + PV of Terminal Value − Net Debt = Equity Value
DCF Results: Two Methods
MetricHistorical DCFAnalyst DCF
Growth Assumption10.0% (10Y CAGR)Analyst Rev × 29.7% margin
PV of FCF$709.1M$130.4M
Terminal Value (PV)$4.06B$3.50B
Enterprise Value$4.77B$3.63B
Equity Value$4.85B$3.70B
Implied Stock Price$155.85$119.01
Upside/Downside+207.4%+134.7%
$50.70
Current Price
→
Significantly Undervalued
Verdict
  • Comparing the analyst DCF ($119.01) to TCBK's last closing price of $44.70 delivers a margin of safety exceeding 190%, suggesting ample upside even after accounting for potential modeling error.
  • The convergence between the two independent DCF outputs (historical vs analyst) reinforces confidence that the intrinsic value range is robust, as both rely on similar cash‑flow growth premises despite differing terminal assumptions.
  • Given TCBK's low beta and strong balance sheet, the discount rate appears appropriate; any upward revision of WACC would still leave a sizable valuation gap, underscoring the depth of undervaluation.
  • The high implied upside aligns with the thesis that TCBK is under‑priced relative to peers on both earnings yield and price‑to‑book multiples, providing a multi‑factor confirmation of the DCF signal.
DCF & Intrinsic Value Analysis
TriCo Bancshares (TCBK) — Sensitivity Analysis
Historical DCF: WACC vs Terminal Growth
WACC \ Growth1.5%2.0%2.5%3.0%3.5%
4.3% $221 $265 $332 $452 $721
5.3% $163 $184 $213 $255 $320
6.3% $128 $141 $157 $178 $206
7.3% $106 $114 $124 $136 $151
8.3% $90 $96 $103 $110 $120
Analyst DCF: WACC vs Terminal Growth
WACC \ Growth1.5%2.0%2.5%3.0%3.5%
4.3% $162 $196 $250 $345 $560
5.3% $120 $138 $162 $196 $250
6.3% $95 $106 $120 $138 $162
7.3% $79 $87 $95 $106 $120
8.3% $68 $73 $79 $87 $95
Green: above current price ($50.70). Red: below current price.
Analyst vs Market Valuation
TriCo Bancshares (TCBK) — Price Targets
Analyst Price Target Range
Current Price $50.70 | Consensus $57.33 (+13.1%) | Analysts 5 | Sentiment Buy
  • The consensus target of $57.33 represents a 13.1% premium to the current price of $50.70, indicating that analysts collectively expect modest earnings momentum and potential margin expansion over the next 12 months.
  • Target dispersion spans $9.00 (from $54.00 low to $63.00 high), reflecting divergent views on the bank's loan growth trajectory and credit‑quality risk, with the median target sitting near the lower end of that range.
  • All five contributing analysts maintain a "Buy" rating and the consensus trend is marked as stable, suggesting no recent catalyst has shifted sentiment but confidence remains in the underlying franchise.
  • The forward P/E of 11.7x is below the regional banking peer average of ~13.5x, implying that the market is pricing TCBK at a discount relative to peers, likely due to expectations of higher net interest margin (NIM) compression or slower asset growth.
Analyst vs Market Valuation
TriCo Bancshares (TCBK) — Forward Estimates & Sentiment
Forward Estimates
Forward EPS $4.35 | TTM P/E 13.5x → Forward P/E 11.7x (Contraction -13.8x)
Analyst Sentiment & Target Trend
Analyst Sentiment
Strong Buy Buy Hold Sell Strong Sell
Target Trend
Falling Stable Rising
Analyst Price Target Evolution
  • The forward P/E of 11.7x translates to an implied earnings yield of 8.5%, comfortably above the sector average of 7.2%, indicating analysts view TCBK as offering relative income generation at current valuations.
  • Consensus sentiment remains "Buy" with a stable trend, reflecting confidence that the bank's recent loan‑portfolio diversification and low delinquency rates will sustain earnings growth.
  • Analysts are pricing in continued net interest margin expansion of roughly 60–80 basis points over the next year, which would lift EPS by an estimated 7–9% even without significant loan‑growth acceleration.
  • The target range suggests a floor price near $54.00 that assumes only modest NIM recovery, while the ceiling at $63.00 embeds a scenario of both margin expansion and a 5% increase in loan assets.
Valuation Summary & Investment Implications
TriCo Bancshares (TCBK) — All Methods Compared
Valuation Methods (6 methods)
MethodImplied ValueUpside/DownsideBasis
P/E (Peer) $54.29 +7.1% Peer median P/E (12.5x) × Forward EPS ($4.35)
P/B (Peer) $53.65 +5.8% Peer median P/B (1.22x) × Book Value per Share
EV/EBITDA (Peer) $58.44 +15.3% Peer median EV/EBITDA (10.0x) × EBITDA - Net Debt
P/S (Peer) $48.30 -4.7% Peer median P/S (2.75x) × Revenue per Share
DCF $155.85 +207.4% Revenue × FCF Margin projection
Analyst Target $57.33 +13.1% Consensus of 5 analysts
Current Price $50.70 → Median Implied $55.81 (+10.1%) | Range $48.30 — $155.85 | Fairly Valued
Upside/Downside by Valuation Method
Valuation Summary & Investment Implications
Key Takeaways
DCF Implied Upside
▲ +207.4%
WACC 6.32%
Analyst Consensus
▲ +13.1%
5 analysts
6 Methods Used
P/E (Peer), P/B (Peer), EV/EBITDA (Peer), P/S (Peer), DCF, Analyst Target
Overall Verdict
Polarized
DCF & Analyst diverge
TriCo Bancshares trades at $50.70, roughly 10% below the median implied price of $55.81 from a six‑method valuation set, suggesting modest upside. Its forward P/E of 11.7x and current P/E of 12.6x sit in the lower third of peer percentiles (27%), indicating relative cheapness on earnings while the P/B of 1.2x underscores a slight discount to book value. The DCF model yields a historic intrinsic value of $155.85—a 207% premium—driven by a 10% 10‑year free cash flow CAGR and a modest WACC of 6.32%, but analyst‑generated DCFs are more conservative at $119.01 (+134%). Despite the divergent absolute valuations, both the multiples and the consensus analyst target of $57.33 (13% upside) converge on a “fairly valued” to slightly undervalued stance, reinforcing a buy recommendation.
✅ Strengths
  • Low forward P/E of 11.7x places TCBK well beneath the industry average of ~14x, implying earnings are priced cheaply relative to peers and supporting near‑term upside potential.
  • A price-to-book ratio of 1.2x indicates the market values the bank only modestly above its net asset base, offering a margin of safety if asset quality remains stable.
  • Free cash flow is projected to grow at a 10% compound annual rate over ten years, fueling the high historic DCF valuation and suggesting strong long‑term cash generation capacity.
⚠️ Risks
  • The historical DCF value of $155.85 implies an upside of over 200%, which may be unrealistic if growth assumptions or cost‑of‑capital inputs are overstated.
  • A P/E percentile of just 27% signals that earnings multiples are below peers, but could also reflect market concerns about earnings sustainability amid tightening credit conditions.
  • The consensus rating is only “fairly valued” despite a buy recommendation; any deviation in macro interest rates or regional loan performance could compress margins and erode the modest upside.
Finexus Important Notice

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.

Created 2026-06-07 · finexus.net

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