KeyCorp

(New York Stock Exchange)
Back to all articles
Slightly Bullish +25

Is KeyCorp (KEY) Pricing Look Interesting After Recent Share Price Pullback

AI-generated analysis

🏦 KeyCorp shares closed at US$19.41, reflecting a recent pullback with an 11.5% decline over the past 30 days and 25.7% gain over the last year.

πŸ’° The stock's long-term performance shows significant growth with returns of 93.1% over three years and 25.7% over one year compared to a 7.5% drop year-to-date.

πŸ“Š Simply Wall St rates KeyCorp 4 out of 6 on its valuation checklist, suggesting the stock may be priced below estimates of fair value across several metrics.

πŸ” The Excess Returns model estimates an intrinsic value of US$37.07 per share based on a book value of US$16.22 and stable EPS of US$1.95.

βš–οΈ This valuation approach implies the current price is 47.6% undervalued compared to the calculated fair value using analyst-based return on equity estimates.

πŸ“‰ KeyCorp currently trades at a P/E ratio of 12.55x, which sits between the broader Banks industry average of 11.03x and its peer group average of 13.98x.

🎯 Simply Wall St's proprietary Fair Ratio suggests a valuation multiple of 14.19x, indicating shares are trading below this adjusted normal level.

πŸ“ˆ An optimistic narrative projects a fair value around US$32.76 based on a 7.91% annual revenue growth assumption and net interest income benefits.

⚠️ A bearish narrative suggests a lower fair value of approximately US$18.00 due to concerns over reliance on commercial borrowers and potential margin challenges.

πŸ“‰ The conservative outlook assumes a higher 16.37% revenue growth but highlights risks if activity softens or credit conditions turn less favorable.

πŸ”„ Management themes include regional banks adapting to interest rate shifts, changing loan demand trends, and rising funding costs impacting the sector.

πŸ’‘ Valuation analysis combines fundamental metrics like P/E, P/B, and cash flow with a comprehensive "Fair Value" perspective tailored to specific business risks.

πŸ”Ž Investors are encouraged to compare different viewpoints ranging from optimistic US$32.76 to cautious US$18.00 valuations before deciding on the current price of around US$19.41.

🌐 The article notes that valuation views can update automatically as new news or earnings reports arrive on the platform's Community page.

Bullish Signals
  • KeyCorp shares recently gained 2.7% over the last 7 days, despite a longer-term decline.
  • The company scores 4 out of 6 on Simply Wall St's valuation checklist, suggesting the stock may be priced below fair value.
  • Excess Returns analysis estimates an intrinsic value of US$37.07 per share versus a recent close of US$19.41, implying a 47.6% undervaluation.
  • The stock trades at a P/E ratio of 12.55x, which is below the proprietary Fair Ratio estimate of 14.19x, indicating a potential discount.
  • An optimistic valuation narrative supports a fair value of US$24.55 per share, implying an undervaluation of around 21.0% versus the last close.
  • Analysts in this bullish view expect net interest income to benefit from repricing tailwinds and tighter control of deposit costs.
  • Revenue growth assumptions for the optimistic narrative project 7.91% annual growth, supported by improved margins and diversified fee income.
Risk Factors
  • KeyCorp shares have declined 11.5% over the last 30 days, indicating short-term weakness despite longer term strength.
  • The stock has underperformed over recent periods with a 7.5% decline year to date and only 25.7% return over 1 year compared to higher long-term gains.
  • Analysts highlight risks that KeyCorp's reliance on commercial borrowers and fee businesses is vulnerable if activity softens.
  • The bearish narrative view prices the stock at US$18.00, which would be 7.8% below the recent close of US$19.41.
  • Higher ongoing spending and ambitious margin targets could prove hard to deliver if interest rates or credit conditions turn less helpful.
  • Concerns exist regarding credit risk, regulatory issues, and loan demand affecting profitability within the broader banking conversation.
Full Analysis
KeyCorp shares closed at US$19.41, reflecting a mixed performance with 25.7% returns over the last year but recent declines of 11.5% over 30 days and 7.5% year to date. The article evaluates whether this price aligns with intrinsic value by analyzing several valuation metrics, noting that KeyCorp scores 4 out of 6 on Simply Wall St's valuation checklist, suggesting potential undervaluation compared to certain fair value estimates. Under the Excess Returns model, KeyCorp has an estimated intrinsic value of US$37.07 per share based on a book value of US$16.22 and stable EPS of US$1.95, with an excess return of US$0.73 per share implying an average return on equity of 11.32%. This translates to the stock being approximately 47.6% undervalued relative to the recent share price. Regarding valuation multiples, KeyCorp trades at a P/E of 12.55x, which sits between the Banks industry average of 11.03x and the peer group average of 13.98x. Simply Wall St's proprietary Fair Ratio model estimates a normal P/E of 14.19x, further indicating the shares are trading below that adjusted benchmark. Two primary investment narratives offer alternative valuations: an optimistic view supporting a US$24.55 fair value with 7.91% annual revenue growth, driven by net interest income benefits from repricing and diversified fee income from wealth management and commercial payments; and a cautious view projecting a US$18.00 fair value with higher 16.37% revenue growth assumptions but significant concerns regarding commercial borrower reliance and ambitious margin targets. This analysis presents KeyCorp as potentially undervalued at current levels of around 21.0% below the optimistic narrative's fair value, though bearish perspectives suggest overvaluation at roughly 7.8% above their US$18.00 estimate, highlighting the need for investors to assess risk factors such as credit quality and regulatory conditions alongside valuation metrics.