Old National Bancorp (ONB) has recently engaged in legal action against Bell Bank and eight former employees, accusing them of colluding in resignations, misusing trade secrets, and poaching customers at several key branches in Minnesota. This legal dispute adds a layer of complexity to the bank’s operations, prompting investors to closely monitor its implications.
Despite the lawsuit, Old National has demonstrated solid performance, with its stock currently priced at approximately $23.35. This represents a significant 10.66 percent increase over the past month and a year-to-date total shareholder return of 10.57 percent. Investors appear to be cautiously optimistic about the bank’s growth, even as they navigate the newly introduced risks stemming from the litigation.
The situation raises questions about the bank’s valuation, especially as analysts suggest that Old National is currently undervalued relative to its potential growth. With an expected earnings growth trajectory reaching $1.5 billion, or $3.0 per share, by September 2028—up from approximately $551.6 million now—there appears to be a compelling case for investment. The anticipated price-to-earnings (PE) ratio would drop to 10.8x based on 2028 earnings estimates, down from the current 15.8x.
However, achieving the projected growth is not guaranteed. The bank faces challenges such as conservative loan growth and concerns over its commercial real estate portfolio, which could hinder its earnings potential. This context provides a more nuanced view of Old National’s valuation. Currently trading at around 15.5 times earnings, the stock is priced higher than both the broader U.S. banking sector and its peers, which could indicate that the market is already pricing in future growth.
As investors reassess their strategies in light of these developments, Old National Bancorp appears to offer a compelling opportunity for those willing to look beyond the immediate legal challenges. With its robust earnings growth and favorable long-term prospects, there may still be room for strategic investment.
Overall, the case surrounding Old National Bancorp reflects a critical moment in its journey, balancing legal complexities with promising financial forecasts that could spell opportunity for savvy investors.