Benzinga | Jul 14, 2020 10:33AM EDT

Price Over Earnings Overview: First Republic Bank



Right now, First Republic Bank Inc. (NYSE:FRC) share price is at $109.91, after a 3.01% increase. Moreover, over the past month, the stock decreased by 0.97%, but in the past year, increased by 16.08%. Shareholders might be interested in knowing whether the stock is overvalued, even if the company is performing up to par in the current session.

Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently under from its 52 week high by 12.16%.

The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E indicates that shareholders do not expect the stock to perform better in the future, and that the company is probably undervalued. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Most often, an industry will prevail in a particular phase of a business cycle, than other industries.

First Republic Bank Inc. has a better P/E ratio of 20.77 than the aggregate P/E ratio of 10.72 of the Banks--Regional industry. Ideally, one might believe that First Republic Bank Inc. might perform better in the future than it's industry group, but it's probable that the stock is overvalued.

Price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors may not be able to attain key insights from trailing earnings.