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A decade ago, Standard Chartered (LSE:STAN) shares were sliding. The stock had reached a near-all time high in 2013 but the shares proceeded to lose around 75% of their value over the following three years. In September 2015, they were changing hands for around 730p. And if an investor had purchased £10,000-worth of stock then, they’d now be looking at an 89.7% gain. In others words, that £10,000 would now be worth £18,970.
The trajectory over the past 10 years, however, has been anything but linear. The stock pushed much further down on several occasions, and essentially bottomed out around the pandemic along with many of its peers. So, what’s happened with Standard Chartered today? And is the stock still worth investing in?
Finding fair value
Of course, some will argue that the share price history isn’t really that important, but I disagree. After such a turbulent decade, investors who are now seeing their investment returns turn positive may be looking to cash in on their gains.
There’s undoubtedly some profit-taking happening. And while this shouldn’t always colour an investor’s perspective on a stock, it’s important to bear in mind, as is any interpretation on price action and investor behaviour.
From a valuation perspective, there are several reasons to be positive. The stock certainly doesn’t look too expensive at 9.7 times forward earnings. This is considerably above where it has been, reflecting a re-rating from the market — when investors change their collective view on how much a company is worth, independent of immediate changes in its reported profits or cash flows.
This price-to-earnings (P/E) ratio falls to 8.1 times forward earnings 2026 and 7.2 times for 2027. This pace of earnings growth actually points to a P/E-to-growth (PEG) ratio under one, which is both attractive and usual with banks — especially if we haven’t adjusted for dividends.
Complementing this is the dividend. The yield currently sits around 2.4% and this is set to rise over the coming years, reaching 3% (based on today’s share price) in 2027, according to the forecasts.
Finally, the price-to-book (P/B) ratio suggests the stock is undervalued, with the ratio currently sitting at 0.94. This implies investors are paying less for the company than its net asset value.
The bottom line
The valuation points to a potentially undervalued position. However, that should be tempered against the perceived risk of the company’s geographical operations.
Standard Chartered operates primarily in countries with dynamic and developing economies, such as the United Arab Emirates, Saudi Arabia, Qatar, Egypt, Lebanon, Hong Kong, Singapore, India, and China, focusing heavily on cross-border transaction banking in emerging markets. Its exposure to geopolitical risks, trade tariffs, and volatile markets in these regions contributes to increased perceived risk for investors.
However, that’s simply part of the trade-off. It offers an attractive growth-adjusted valuation, but risk is elevated. Personally, I believe the stock is worth considering. It’s still on my watchlist.
