Mid Penn Bancorp

Mid Penn Bancorp Inc earns a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 4% discount to our quantitative fair value estimate of $37.30 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The firm's valuation metrics strengthen our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its book value yield of 97.9%, which falls in the top 30% globally. The market price is low relative to the book (accounting) value of the company's equity, which contributes to our view that shares are cheap.

Alternatively, the firm's unfavorable dividend structure is potentially concerning. Dividends represent a stable form of future cash flows returned to shareholders, and low dividend payments can increase the perceived risk of a business. The firm's dividend per share growth, for example, sits in the bottom 45% compared with peers globally. Weak or negative dividend per share momentum can signal financial weakness or distress and is often concerning. Despite our favorable price/fair value ratio, this characteristic is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is undervalued, this outperformance had a negative impact on our valuation estimate.

With its quantitative economic moat rating of none, we do not expect this company to materially outearn its cost of capital in the long run. However, its financial health score is strong, suggesting that the company should be well positioned to weather tough times.