Tompkins Financial

Tompkins Financial Corp is assigned 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 5% discount to our quantitative fair value estimate of $102.91 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The firm's valuation metrics strengthen our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's book value yield of 67.8% sits in the top 45% compared with global peers. 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 company's lack of profitability is potentially concerning. Companies with low profitability are often less resilient in recessions and are likely to generate weaker future cash flows for shareholders. The firm's sales yield of 18.4%, for example, falls in the bottom 20% globally. This company's inability to generate significant sales growth without meaningful capital investment is a challenge, which, despite our favorable price/fair value ratio, 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.

The company's quantitative economic moat rating of none suggests any excess returns could erode quickly as competition arrives. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.