ENTERPRISE FINANCIAL SERVICES CORP (EFSC): what the price requires
At today's price, ENTERPRISE FINANCIAL SERVICES CORP (EFSC) is priced for 10.6% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/EFSC
Headline
| Field | Value |
|---|---|
| Ticker | EFSC |
| Company | ENTERPRISE FINANCIAL SERVICES CORP |
| Current price | $66.01/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 10.6% |
| Return on equity now | 10.0% |
| ROE gap | +0.6pp |
| Price-to-book | 1.24x |
Solve inputs: computed at a 9.3% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.23σ |
| cohort percentile (of 119 peers) | 37 |
| sustained it ~10 years at this level | 74% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.09x | 3 | expensive |
| Earnings | 1.00x | 2 | justifies |
| Relative | 1.09x | 3 | expensive |
| Growth | 1.01x | 1 | expensive |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.0%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $46.45 | 1.42x | yes | TBVPS $42.68 × 1.09x (ROE (TTM) 9.9% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.23% allowance/loans → ×0.94) |
| Relative Valuation | Relative | $60.30 | 1.09x | yes | P/E 10x (sector median), scenarios: 8.3x / 10.0x / 11.7x (bear / base = sector held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $58.42 | 1.13x | yes | BV/sh $54.43, ROE (TTM) 9.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $60.47 | 1.09x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $65.17 | 1.01x | yes | Rev $0.6B, growth 12% (input: historical growth; tapered), Terminal P/S: 3.2x / 3.8x / 4.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $63.60 | 1.04x | yes | EPS $5.30, growth 4% (input: historical EPS growth), PEG=2.74 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $80.57 | 0.82x | yes | √(22.5 × EPS $5.30 × BVPS $54.43) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $77.39 | 0.85x | yes | EPS $5.30 × (8.5 + 2×4.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $35.47 | 1.86x | yes | EPS $5.30 × (PEG 1.5 × growth 4.5% (input: historical EPS growth)) → PE 6.7x |
| Earnings Yield | Earnings | $57.30 | 1.15x | yes | EPS $5.30 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -0.5% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
Enterprise Financial trades at about 1.2x book (book value per share $54.43) and the price implies a sustained return on equity near 10.3%, essentially what it already earns (about 10%), so the bet is on continuation, not improvement; the bank-appropriate models cluster near $58 to $61, right around the $62.17 price.
The franchise is better than average: net interest margin expanded to 4.28% in the first quarter of 2026 on national deposit verticals and specialized lending, net income was $49.4 million ($1.30 per share), and the dividend was raised for the ninth consecutive quarter.
Bull Case
The market is pricing Enterprise Financial as an ordinary regional bank, and the fundamentals say it is a better-than-ordinary one. The clearest evidence is the net interest margin: it expanded 2 basis points to 4.28% in the first quarter of 2026, a level well above the typical regional bank, on net interest income of $166 million. That margin is not an accident; it reflects a deposit-gathering franchise built around national deposit verticals and specialized lending. The 10-K describes a business spanning construction and development, residential real estate, SBA, and consumer loan products, paired with a complete suite of treasury and deposit products (FY2025 10-K, accession 0001025835-26-000058). A bank that can fund itself with sticky, diversified deposits earns a wider spread than one competing only on local rates, and Enterprise is doing exactly that.
The capital return and the consistency confirm a well-run franchise. The quarterly dividend was raised to $0.34, the ninth consecutive quarterly increase, and the share count has been roughly flat to slightly lower, so per-share value is not being diluted away. First-quarter net income was $49.4 million, or $1.30 per share, and management reaffirmed mid-single-digit growth targets while highlighting that it offset seasonal deposit outflows with growth in national deposit verticals, which underpinned the margin resilience. Asset quality has been improving, which for a bank is the difference between earnings you can trust and earnings that reverse through provisions.
The valuation contrast is the bull case in one line. At $62.17 (June 27, 2026) the market pays about 1.2x book value and is asking the bank to sustain a return on equity of roughly 10.3%, which is essentially what it already earns (about 10%). When the price requires only a continuation of current performance, not an improvement, the bet is low. The asset-based excess-return models mark the stock near $58 to $60, the relative P/E frame near $60, and the discounted-future-market-cap frame near $61, all clustered right around the price. A bank trading near where its own earning power and book value place it, with a wide margin, a rising dividend, and improving credit, is fairly priced for a steady compounder, and the multiple sits in the lower half of its peer group's price-to-book despite the superior margin.
Bear Case
The capital-allocation question is the right place to press, because a bank's value is made or destroyed by what it does with deposits, and Enterprise's lending mix carries concentration risk that the steady results can mask. A significant portion of the loan book is commercial, and commercial real estate is a recognized regulatory focus. The 10-K notes that regulators prescribe guidelines to identify institutions potentially exposed to significant risk from CRE lending concentrations, and that the company reviews its collateral position and industry exposure across a significant portion of the commercial portfolio (FY2025 10-K, accession 0001025835-26-000058). CRE has been the soft spot for regional banks in this rate cycle, and a bank with meaningful exposure is one bad office or multifamily cycle away from elevated provisions that would compress the very return on equity the price assumes it will sustain.
The loan trajectory is a quieter concern. Period-end loans fell to $11.7 billion as repayments and SBA loan sales outpaced new production. SBA sales generate fee income and book gains, but they also mean the bank is selling some of its highest-yielding assets, and if loan production does not reaccelerate, the earning-asset base that drives net interest income stops growing. A 4.28% margin on a flat-to-shrinking loan book produces flat net interest income, which is why management's mid-single-digit growth target depends on deposit and loan momentum returning.
The price near 1.2x book and the implied roughly 10.3% return are within reach of history, but only about 75% of firms earning this return have sustained it over a long horizon, so the base rate is not a guarantee. The models that mark above the price (the Graham number near $81, the Ben Graham formula near $77) lean on assumptions a slow-growing bank may not meet, while the bank-fair-value model that prices off tangible book and the current return marks the stock lower, near $46. The honest bear read is that Enterprise is a good bank at a fair price, which means the return from here depends on it simply not stumbling, and the CRE concentration and the flat loan book are the two places a stumble could come from.
Valuation
A bank is worth the return it earns on its capital, so Enterprise is read off price-to-book, not an operating multiple. At $62.17 against book value per share of $54.43 (tangible book of $42.68), the stock trades at roughly 1.2x book, and the market is implicitly asking the bank to sustain a return on equity of about 10.3%. The reference point is reassuring: the bank has recently been earning about 10%, so the price requires continuation, not improvement.
The models cluster tightly around the price, which is the signature of a fairly valued bank. The simple excess-return model marks near $58, the two-stage version near $60, the relative P/E frame (about 10x sector median on EPS of $5.30) near $60, and the discounted-future-market-cap frame near $61. The bank-fair-value model, which prices tangible book at the ratio of return on equity to cost of equity, marks lower at about $46, because it leans on tangible rather than total book and on the current return. The Graham-style frames mark higher (near $77 to $81) but assume earnings power the slow growth may not deliver. Taken together, the consensus of the bank-appropriate models sits right around the current price.
How unusual is the implied bet? Against Enterprise's own record, the assumed roughly 10.3% return is within reach of what it has earned. Against peers, the 1.2x book multiple sits in the lower half of the regional-bank range despite the bank's wider-than-average net interest margin, which is mildly favorable. Against history, only about 75% of firms earning this return sustained it over a long horizon, the usual caution. The honest read: this is a well-run bank with a strong margin, priced fairly to modestly below its earning-power value, where the upside is steady compounding and the risk is credit concentration rather than valuation.
Catalysts
The most recent print was the first-quarter 2026 report, which topped estimates. Net income was $49.4 million, or $1.30 per share, net interest income was a relatively stable $166 million, and the net interest margin expanded 2 basis points to 4.28%. Deposits were $14.5 billion, slightly lower sequentially but higher than a year ago, with management noting it offset seasonal outflows through growth in national deposit verticals. The quarterly dividend was raised to $0.34, the ninth consecutive increase.
Management reaffirmed mid-single-digit growth targets for the year, citing strong deposit growth and ongoing asset-quality improvement. The reaffirmed guidance and the dividend increase are the steadying signals; the watch item is whether loan production reaccelerates, since period-end loans declined to $11.7 billion as repayments and SBA loan sales outpaced new originations.
The forward thesis tracks margin durability, loan growth, and credit. The supportive drivers are the wide net interest margin and the national deposit verticals that fund it. The risks are the commercial real estate concentration that regulators flag as a focus area, and a loan book that is currently flat to shrinking. Watch the quarterly margin trend, loan production versus repayments and SBA sales, deposit growth in the national verticals, and any change in the allowance for credit losses or non-performing assets, since asset quality is what would most directly threaten the return on equity the price assumes.
Sources: Enterprise Financial Services Q1 2026 results and 8-K (stocktitan.net); EFSC Q1 2026 earnings beat (Yahoo Finance); EFSC Q1 2026 earnings call highlights (gurufocus.com); EFSC Q1 2026 earnings transcript (AOL, Motley Fool).
Peer Cohorts (Per Segment, With Filing Citations)
Banking (single operating & reportable segment) (reported)
- BY (BYLINE BANCORP, INC.)
- (no filing in the citation store)
- VLY (VALLEY NATIONAL BANCORP)
- (no filing in the citation store)
- WBS (WEBSTER FINANCIAL CORPORATION)
- (no filing in the citation store)
- BANR (Banner Corporation)
- (no filing in the citation store)
- STEL (Stellar Bancorp, Inc.)
- (no filing in the citation store)
- TCBK (TriCo Bancshares)
- (no filing in the citation store)
- UCB (UNITED COMMUNITY BANKS INC)
- (no filing in the citation store)
- FHB (FIRST HAWAIIAN, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.