I’ve always been fascinated by the Lloyds (LSE: LLOY) share price. Despite looking cheap, for years the stock didn’t budge. But in recent times, it seems to have found a new lease of life.

The stock is now up 22.7% year to date. After posting this strong performance in 2024, that brings its total gains for the last 12 months to 31.3%.

Long-term shareholders are finally starting to see a return on their investment. The FTSE 100 bank is now up 7.4% over the last five years. Back then, I would have forked out 54.9p for a share. Today (26 September), I’d pay 59p.

But what could be next in store for the high street stalwart? After its impressive climb, does the stock have further to go? Let’s take a closer look.

Cheap as chips?

Assessing whether a stock has more growing room is a difficult task. After all, the stock market is unpredictable. Quite frankly, nobody knows what will happen. That said, looking at Lloyds’ valuation will provide a good insight into whether its share price could keep climbing.

To do that, I’m going to use the key price-to-earnings (P/E) ratio. Lloyds currently trades on a P/E of 8.4, which looks cheap to me. The FTSE 100 average is 11. So, to pay less than that for a business of Lloyds’ quality feels like a steal.

What’s more, its forward P/E is just 6.3. Again, going on that, it seems that even after soaring this year, Lloyds could keep up its momentum in the times ahead.

I can also use the price-to-book (P/B) ratio. This is a more common metric used to value banks. Right now, Lloyds currently has a P/B of just above 0.9, where 1 is considered fair value.

Challenges ahead?

So, I’d argue at 59p, the FTSE 100 bank still looks cheap. But it’ll most certainly face challenges in the months ahead.

The main one will be interest rates. We’ve now had our first rate cut in the UK. And we recently saw the Fed reduce rates by 0.5% across the pond. While overall falling rates will give investor sentiment a lift, this will harm Lloyds’ margins.

That’s because lower rates mean the bank can’t charge customers as much when they borrow money. We’ve seen this in effect already. During the first half of the year, the firm’s net interest margin fell from 3.18% to 2.94%.

On top of that, Lloyds is solely reliant on the UK for its revenues. Should the domestic economy stutter, that could impact the business.

Chunky yield

So, I’m expecting some volatility. But I’m content with riding some short-term ups and downs. That’s especially true since the passive income from Lloyds’ 4.9% dividend yield will tide me over. That’s above the FTSE 100 average of 3.6%. Last year, the firm upped its payout by 15% to 2.76p a share.

More to give?

Even after rising this year, I still see value in Lloyds shares. And if I had the cash today, I’d happily add the stock to my portfolio.

While I’m expecting its share price to experience some peaks and troughs, I see long-term value in the Footsie bank.