Last Update 07 Jan 26

Fair value Increased 1.42%

OZK: Diversification And Steepening Yield Curve Will Support Future Re Rating

Analysts have nudged their fair value estimate for Bank OZK higher to about $55.56 from $54.78, reflecting modest adjustments to growth, margins and future P/E assumptions. This change comes alongside a mixed set of recent price target moves that highlight both ongoing business transition and cautious optimism around mid cap banks.

Analyst Commentary

Recent research on Bank OZK reflects a mix of optimism about the business transition and caution around how quickly that transition can support a higher valuation. Price targets cluster in a relatively tight range, but the drivers behind them differ, which is useful context if you are weighing risk and reward.

Bullish Takeaways

Bullish analysts point to the Commercial & Industrial Banking (CIB) segment as a key support for the bank's diversification effort, which they see as important for sustaining earnings quality over time.
Some see the current phase of repayments in the RESG portfolio as manageable and believe that steady performance here can help support confidence in credit quality and capital deployment.
Bullish analysts also note that the market may eventually reward the broader business mix with a higher P/E multiple if execution on diversification stays on track.
Within mid cap banks more broadly, bullish analysts describe the backdrop as a potential "catch up" year compared with larger peers, which they view as supportive of maintaining or modestly lifting fair value assumptions for names like Bank OZK.

Bearish Takeaways

More cautious analysts highlight that repayments in the RESG book for 2026 are larger than they previously expected, which could weigh on near term growth if reinvestment opportunities are slower to materialize.
There is concern that some credit migration, even if trends are currently holding up, may keep investors focused on risk rather than paying a premium multiple for the stock.
Bearish analysts argue that multiple expansion may be limited until the bank is further along in its transition. In their view, the current mix and visibility on earnings streams are not yet strong enough to justify a re rating.
A neutral stance from some research houses signals that, while they see reasons for cautious optimism across mid cap banks, they are not yet ready to assume that Bank OZK will outperform its peer group on valuation or execution.

What's in the News

Bank OZK's Board of Directors declared a quarterly cash dividend on the common stock of $0.46 per share, which is $0.01, or 2.22%, above the prior quarter (Key Developments).
The common stock dividend is payable on January 20, 2026, to shareholders of record as of January 13, 2026 (Key Developments).
Bank OZK has increased its quarterly cash dividend on its common stock in each of the last sixty two quarters, reflecting a long-running pattern of regular dividend adjustments (Key Developments).

Valuation Changes

Fair Value Estimate was revised from about $54.78 to about $55.56 per share, a small upward adjustment to the model output.
The Discount Rate was kept effectively unchanged at about 6.96%, indicating no material shift in the required return assumption.
Revenue Growth was adjusted slightly lower in the model from about 8.50% to about 8.37%.
Net Profit Margin was trimmed modestly from about 36.38% to about 36.17% in the latest update.
Future P/E moved slightly higher from about 10.22x to about 10.46x, reflecting a small change in the assumed valuation multiple.

Expansion in high-growth Sun Belt regions and CIB division buildout are driving lending, deposit growth, and increased non-interest revenue.
Investments in technology and conservative underwriting enhance efficiency and asset quality, supporting stable earnings and long-term profitability.
High exposure to commercial real estate, limited loan growth, rising costs, and insufficient diversification heighten Bank OZK's vulnerability to economic shifts and competitive threats.

Catalysts

About Bank OZK

Operates as a full-service Arkansas state-chartered bank that provides retail and commercial banking services in the United States.What are the underlying business or industry changes driving this perspective?

Ongoing population migration and economic growth in Sun Belt regions, especially the Southeast and Southwest, provide Bank OZK with significant opportunities to expand its real estate, commercial, and business lending activities, which is expected to steadily drive revenue growth as new branches and business banking teams are rolled out in high-growth areas.
The accelerated buildout of the Corporate & Institutional Banking (CIB) division-including its expansion into new verticals, geographies (Atlanta, Nashville), and fee-generating businesses-is set to increase both lending-related fee income and relationship-driven deposit growth, supporting higher non-interest revenue and improving net margins.
Continued investment in technology, data, and digital banking platforms is expected to enhance operational efficiency and customer acquisition, helping lower overhead and enable scalable growth, which should positively impact efficiency ratios and earnings over time.
The bank's consistent focus on conservative underwriting and strong sponsor engagement has resulted in robust asset quality and low charge-offs compared to industry peers, likely limiting future credit loss provisions and supporting stable net earnings through economic cycles.
Momentum from industry consolidation presents Bank OZK opportunities to attract top talent, acquire customer relationships, and capture market share as other regional banks merge or exit, sustaining above-trend organic loan and deposit growth and boosting long-term profitability.

Bank OZK Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Bank OZK's revenue will grow by 10.6% annually over the next 3 years.
Analysts assume that profit margins will shrink from 46.4% today to 39.8% in 3 years time.
Analysts expect earnings to reach $815.7 million (and earnings per share of $7.08) by about September 2028, up from $702.1 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.3x on those 2028 earnings, up from 8.3x today. This future PE is lower than the current PE for the US Banks industry at 11.9x.
Analysts expect the number of shares outstanding to decline by 0.71% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Bank OZK Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heavy concentration in commercial real estate/construction lending, particularly within the RESG portfolio, exposes Bank OZK to outsized cyclical risk if commercial real estate markets deteriorate or if there are structural shifts away from CRE demand, which could lead to higher loan losses, increased provisions, and downward pressure on net income during downturns.
Meaningful loan paydowns and anticipated continued elevated repayments within the RESG segment suggest that growth here may be muted or even flat in upcoming years; if loan growth in higher-yielding segments lags, this could limit revenue expansion and slow earnings growth.
Ongoing expansion of branch network and substantial hiring increases cost structure and elevates operational leverage; if revenue and deposit growth do not keep pace with aggressive expansion, efficiency ratios could worsen and net margins may decline.
Rising regulatory scrutiny and a high allowance for credit losses weighting toward recession/stagflation scenarios reflect persistent economic uncertainty; if adverse scenarios materialize, Bank OZK may face further reserve build requirements or higher credit costs, which would negatively impact earnings.
Slower pace of geographic and business line diversification, along with the early-stage build-out of the Corporate & Institutional Banking segment (CIB), leaves Bank OZK vulnerable to competitive pressure from larger banks, technological disruption from fintechs, and shifts in consumer preferences-risks that could erode market share, pressure revenues, and raise expenses if not successfully managed.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $56.444 for Bank OZK based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $67.0, and the most bearish reporting a price target of just $42.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.1 billion, earnings will come to $815.7 million, and it would be trading on a PE ratio of 9.3x, assuming you use a discount rate of 6.8%.
Given the current share price of $51.99, the analyst price target of $56.44 is 7.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

OZK: Future Dividend Increases And Business Diversification Will Drive Multiple Expansion