Enterprise Financial Services has been treading water for the past six months, recording a small loss of 4.6% while holding steady at $54.20.
Does this present a buying opportunity for EFSC? Or is its underperformance reflective of its story and business quality? Find out in our full research report, it’s free.
Why Does Enterprise Financial Services Spark Debate?
Starting as a single bank in Missouri in 1988 and expanding through strategic growth, Enterprise Financial Services (NASDAQ: EFSC) is a financial holding company that offers banking, lending, and wealth management services to businesses and individuals across seven states.
Two Positive Attributes:
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.
Enterprise Financial Services’s net interest income has grown at a 19.3% annualized rate over the last four years, much better than the broader bank industry.
2. Steady Increase in TBVPS Highlights Solid Asset Growth
For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.
Enterprise Financial Services’s TBVPS increased by 10.5% annually over the last five years, and growth has recently accelerated as TBVPS grew at a solid 12.3% annual clip over the past two years (from $30.55 to $38.54 per share).
One Reason to be Careful:
Projected Net Interest Income Growth Is Slim
Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Enterprise Financial Services’s net interest income to rise by 5.5%, close to its 6.2% annualized growth for the past two years.
Final Judgment
Enterprise Financial Services’s merits more than compensate for its flaws, but at $54.20 per share (or 1.1× forward P/B), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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