2 Bank Stocks with Solid Fundamentals and 1 to Keep Off Your Radar
In This Article:
Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. But concerns about loan losses and tightening regulations have tempered enthusiasm, and over the past six months, the banking industry has pulled back by 10.1%. This drawdown was disappointing since the S&P 500 held its ground.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two resilient bank stocks at the top of our wish list and one that may face trouble.
One BankStock to Sell:
Old National Bank (ONB)
Market Cap: $7.83 billion
Tracing its roots back to 1834 when Andrew Jackson was president, Old National Bancorp (NASDAQ:ONB) is a bank holding company that provides commercial and consumer loans, deposit services, wealth management, and treasury solutions primarily throughout the Midwest region.
Why Does ONB Worry Us?
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Annual revenue growth of 1.1% over the last two years was below our standards for the bank sector
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Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 27 basis points (100 basis points = 1 percentage point)
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High debt servicing costs relative to its earnings leave little margin for error in meeting its financial obligations
Old National Bank is trading at $21.18 per share, or 1x forward P/B. Read our free research report to see why you should think twice about including ONB in your portfolio, it’s free.
Two Bank Stocks to Watch:
WSFS Financial (WSFS)
Market Cap: $3.02 billion
Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ:WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.
Why Could WSFS Be a Winner?
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11% annual net interest income growth over the last four years surpassed the sector average as its products resonated with borrowers
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Impressive 17.5% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
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Projected tangible book value per share growth of 12.8% for the next 12 months suggests its capital momentum from the last two years will persist
At $53.22 per share, WSFS Financial trades at 1.1x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.