Pinnacle Financial Partners

Pinnacle Financial Partners Inc receives a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 7% discount to our quantitative fair value estimate of $100.65 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The firm's profitability strengthens our valuation estimate. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. Reflecting the firm's profitability is its earnings yield of 9.9%, which sits in the top 20% compared with peers globally. This suggests that it is generating substantial earnings relative to its share price, which contributes to our view that shares are cheap.

The firm's valuation metrics are an additional encouraging factor. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of 98.0%, a core component of valuation, ranks in the top 30% compared with global peers. The market price is low relative to the book (accounting) value of the company's equity, which further promotes our favorable price/fair value ratio.

With its quantitative economic moat rating of none, this business is unlikely to consistently outearn its cost of capital without structural protection from competition. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.