Is Fifth Third Bancorp (FITB) Still a Buy Despite Its Recent Share Price Gains?

Fifth Third Bancorp (FITB) has long been a focal point for value investors, but its recent share price gains have sparked renewed debate about its investment potential. With a trailing price-to-earnings (P/E) ratio of 13.49 and a forward P/E of 11.71, the stock appears to trade at a discount to historical averages for regional banks. However, intrinsic valuation models paint a more nuanced picture. Alpha Spread estimates an intrinsic value of $69.20 per share, suggesting a 31% undervaluation relative to the current price of $47.55 according to analysis. Similarly, the Excess Returns model projects a value of $85.03, implying a 44% discount according to the same analysis. While the Peter Lynch Fair Value model from Valueinvesting.io contradicts this, suggesting overvaluation by 48%, the consensus among most models leans toward undervaluation according to multiple sources.

The Comerica acquisition, valued at $10.9 billion, is poised to redefine FITB's growth trajectory. By expanding into high-growth markets like Texas and California, the merger is expected to create the 9th largest U.S. bank by assets, with a total asset base of $288 billion. Analysts project that the deal will be accretive to earnings per share (EPS) by 2027, driven by improved net interest income and operating leverage according to analyst commentary. Fifth Third's strategic branch expansion-planning 150 new locations in Texas by 2029-further underscores its commitment to geographic diversification according to Bloomberg reports. These initiatives align with a broader strategy to capture market share in the Southeast, Florida, and the Carolinas, where the bank has already reached 200 financial centers in Florida and 100 in the Carolinas.

Recent financial results reinforce this optimism. Q3 2025 earnings of $0.91 per share exceeded forecasts, despite a $200 million provision tied to the Tricolor fraud according to financial reporting. The bank reported 330 basis points of positive operating leverage and maintained a strong efficiency ratio of 54.1% according to financial reporting. Meanwhile, the acquisition has prompted Fifth Third to pause share repurchases temporarily, prioritizing capital allocation for integration and expansion according to Comerica's announcement. Analysts have raised price targets to an average of $49.75, reflecting confidence in the merger's long-term benefits according to stock analysis.

Yet risks persist. Integration challenges, regulatory hurdles, and macroeconomic headwinds could delay the anticipated synergies. Fitch Ratings has labeled the acquisition "ratings neutral," acknowledging profitability upside but cautioning against integration risks according to research reports. Additionally, while the GuruFocus Projected Free Cash Flow model estimates an intrinsic value of $67.06 (implying a 71% undervaluation), the Peter Lynch model's outlier assessment highlights the uncertainty inherent in valuation assumptions according to financial modeling.

For income-focused investors, FITB's 3.36% dividend yield adds appeal, particularly as the bank continues to demonstrate capital return discipline through its recent $300 million share repurchase according to analyst commentary. However, the stock's potential lies in its strategic transformation. By 2030, Fifth Third aims to concentrate over half of its retail footprint in high-growth regions, positioning itself to capitalize on demographic and economic trends according to Nasdaq analysis.

In conclusion, Fifth Third Bancorp remains a compelling buy for investors who can tolerate short-term integration risks and macroeconomic volatility. The stock's valuation discounts suggest upside potential, while the Comerica acquisition and branch expansion strategy provide a clear path to long-term growth. As the merger nears completion in Q1 2026, the focus will shift to execution-both in integrating Comerica's operations and realizing the projected EPS accretion. For now, the data supports a bullish outlook, albeit with caution for near-term uncertainties.