Axos Financial (AX) Valuation Check As Inflation Jitters Hit Bank Stocks And Cloud Rate Cut Expectations

Axos Financial (AX) has been in focus after higher than expected inflation data raised doubts about near term rate cuts, putting pressure on bank stocks and sharpening investor attention on interest rate risk.

See our latest analysis for Axos Financial.

Despite the inflation driven sell off that recently hit Axos Financial, the current US$89.97 share price sits above its 90 day level, and the 1 year and 3 year total shareholder returns of 39.92% and 97.82% suggest momentum has been positive over a longer stretch.

If rate volatility has you thinking about where else returns could come from, it may be worth scanning our list of 18 top founder-led companies as a fresh source of ideas.

With Axos Financial posting 1 year and 3 year total returns of 39.92% and 97.82%, along with reported revenue of US$1.27b and net income of US$456.63m, is the recent pullback a chance to buy, or is the market already pricing in future growth?

Most Popular Narrative: 19.7% Undervalued

Axos Financial's most followed narrative pegs fair value at $112 per share, comfortably above the recent $89.97 close. This raises a clear valuation gap for investors to weigh.

The analysts have a consensus price target of $100.167 for Axos Financial based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analyst's consensus, you would need to believe that by 2028, revenues will be $1.5 billion, earnings will come to $544.2 million, and it would be trading on a PE ratio of 12.1x, assuming you use a discount rate of 6.8%.

Read the complete narrative.

Want to see what bridges today's price to that higher fair value? The narrative focuses on earnings expansion, firm margins and a richer future earnings multiple. Curious how those pieces fit together?

Result: Fair Value of $112 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside story could be challenged if Axos faces prolonged pressure on net interest margins or if credit quality weakens in its niche lending segments.

Find out about the key risks to this Axos Financial narrative.

Next Steps

Does this story feel more optimistic or cautious to you? Take a moment to look through the key numbers and tensions yourself, then weigh up the 5 key rewards and 1 important warning sign to shape your own view.

Looking for more investment ideas?

If you only stop at one company, you risk missing other opportunities, so broaden your view and let a few targeted stock lists spark fresh thinking.

• Spot potential value opportunities by scanning our list of 49 high quality undervalued stocks that currently pass a strict fundamental screen.
• Strengthen your focus on capital preservation by reviewing 75 resilient stocks with low risk scores that score well on our risk checks.
• Hunt for quality outside the usual names with a screener containing 24 high quality undiscovered gems that many investors may not be watching yet.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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