A Look At TFS Financial (TFSL) Valuation After Analyst Upgrades And Dividend-Driven Investor Interest

TFS Financial (TFSL) has drawn fresh attention after its share price moved above its 200 day moving average, coinciding with renewed focus on Wall Street rating upgrades and its recently paid quarterly dividend.

See our latest analysis for TFS Financial.

At the current share price of $13.91, TFS Financial has been building momentum, with a 7 day share price return of 2.5% and a 90 day share price return of 5.1%, while its 1 year total shareholder return of 24.9% highlights how income from dividends has added meaningfully to price gains over time.

If this kind of dividend backed move has your attention, it can be helpful to broaden your watchlist and see what else stands out among fast growing stocks with high insider ownership.

With TFSL trading near its US$14 analyst price target, supported by an 8.1% yield and recent rating upgrades, the key question is whether the stock remains undervalued or if the market is already reflecting future growth in its current price.

Price-to-Earnings of 43.3x: Is it justified?

On a P/E of 43.3x at the last close of $13.91, TFS Financial trades at a clear premium to both its fair value estimate and banking peers.

The P/E ratio compares the current share price to earnings per share, so a higher figure usually means the market is placing a richer price on each dollar of earnings. For a bank like TFS Financial, that often reflects expectations around future earnings growth, dividend stability, or perceived quality of its income.

Here, the contrast is sharp. TFS Financial is described as expensive relative to the estimated fair P/E of 11.8x and to the peer average of 16.4x, as well as to the wider US Banks industry average of 11.9x. This gap suggests the current market price is assigning a much higher valuation to the company than both its fair ratio and sector benchmarks point to, a level the market could move toward if sentiment or expectations change.

Explore the SWS fair ratio for TFS Financial

Result: Price-to-Earnings of 43.3x (OVERVALUED)

However, you also need to weigh the risk that such a rich P/E multiple compresses, or that any shift in analyst views near the US$14 target cools sentiment.

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

Another View, Using Cash Flows

While the P/E of 43.3x suggests TFS Financial is expensive, our DCF model goes even further. On this view, TFSL at $13.91 is trading above an estimated fair value of $1.41, which points to very limited valuation cushion if expectations are challenged. So which signal matters more to you: earnings or cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TFS Financial for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 882 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own TFS Financial Narrative

If you see the numbers differently or prefer to weigh the data in your own way, you can create a new view in just a few minutes by starting with Do it your way.

A great starting point for your TFS Financial research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Ready for more investment ideas?

If TFS Financial has sharpened your focus, do not stop here, widen your search and line up a few more ideas that genuinely earn a spot on your watchlist.

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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