2 tools to value the Bendigo & Adelaide Bank Ltd (ASX: BEN) share price

Core Viewpoint - Bendigo & Adelaide Bank Ltd (BEN) is currently trading at approximately $12.60, raising questions about its valuation and investment potential in the context of its financial performance and market position. Company Overview - Bendigo & Adelaide Bank, commonly known as Bendigo Bank, was established through the merger of Bendigo and Adelaide Banks in November 2007, operating primarily in the retail banking sector with over 500 community branches and agencies, mainly located along the East Coast and South Australia [2]. Financial Performance - The bank's net interest margin (NIM) is a critical measure of profitability, with Bendigo's NIM at 1.9%, surpassing the ASX major banks' average of 1.78% [6]. - Lending accounted for 87% of Bendigo's total income last year, highlighting the importance of lending activities to its revenue generation [7]. - The return on equity (ROE) for Bendigo stood at 7.9%, which is below the sector average of 9.35%, indicating room for improvement in profitability relative to shareholder equity [8]. Capital Adequacy - The common equity tier one (CET1) ratio for Bendigo was reported at 11.3%, which is lower than the sector average, suggesting potential vulnerabilities in capital adequacy [9]. Dividend Valuation - The total dividend for the last year was $0.63, with projections indicating a growth rate between 2% and 4%. Using a dividend discount model (DDM), the estimated average valuation of BEN shares is $13.32, with an adjusted valuation based on expected future dividends rising to $13.75. When considering gross dividend payments, the fair value forecast increases to $19.64 [11][12][13]. Workplace Culture - Bendigo Bank's workplace culture rating is 2.9 out of 5, which is below the sector average of 3.1, suggesting potential challenges in employee satisfaction and retention [4]. Investment Considerations - Investors are encouraged to analyze multiple years of Bendigo's annual reports and consider diverse opinions to make informed investment decisions [14].