Great Western Bancorp, Inc. (South Dakota) – Value Analysis (NYSE:GWB) : November 13, 2017

Capitalcube gives Great Western Bancorp, Inc. (South Dakota) a score of 57.

Our analysis is based on comparing Great Western Bancorp, Inc. (South Dakota) with the following peers – Access National Corporation, Banc of California, Inc., Investors Bancorp Inc and South State Corporation (ANCX-US, BANC-US, ISBC-US and SSB-US).

Fundamental Overview

Great Western Bancorp, Inc. (South Dakota) has a fundamental score of 57 and has a relative valuation of UNDERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.28 is about median in its peer group.
  • We classify GWB-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • GWB-US‘s relatively high profit margins are burdened by capital inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • Over the last five years, GWB-US‘s return on equity has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • While GWB-US‘s revenues growth in recent years has been around the peer median, the stock’s below peer median P/E ratio suggests that the market likely sees the company’s long-term growth prospects to be fading.
  • The company’s equity capital investment program suggests it is under-investing in a business that is producing peer median returns.

Drivers of Margin

  • GWB-US‘s pre-tax margin suggests relatively low operating costs.
  • The company’s net interest income (net interest income/total revenues) of 76.83% is around peer median suggesting that GWB-US‘s lending operations does not benefit from any differentiating pricing advantage. However, GWB-US‘s pre-tax margin is more than the peer median (41.53% compared to 31.14%) suggesting relatively low operating costs.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 23.17% is around peer median. In addition, GWB-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 54.16x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Great Western Bancorp, Inc. is a full-service regional bank holding company. It focuses on business and agribusiness banking, complemented by retail banking and wealth management services. The company’s loan portfolio consists primarily of business loans, which include commercial and industrial, commercial real estate, and agribusiness loans. Great Western Bancorp was founded in 1962 and is headquartered in Sioux Falls, SD.