Over the past six months, Atlantic Union Bankshares’s shares (currently trading at $30.06) have posted a disappointing 19.8% loss, well below the S&P 500’s 1.7% gain. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Atlantic Union Bankshares, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Atlantic Union Bankshares Not Exciting?
Even though the stock has become cheaper, we're cautious about Atlantic Union Bankshares. Here are three reasons why we avoid AUB and a stock we'd rather own.
1. Net Interest Income Points to Soft Demand
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.
Atlantic Union Bankshares’s net interest income has grown at a 7.3% annualized rate over the last four years, slightly worse than the broader bank industry.
2. Substandard TBVPS Growth Indicates Limited Asset Expansion
We consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation.
Disappointingly for investors, Atlantic Union Bankshares’s TBVPS grew at a sluggish 3.2% annual clip over the last two years.
3. TBVPS Projections Show Stormy Skies Ahead
Because banks generate earnings primarily through borrowing and lending, they’re valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity). Specifically, we look at tangible book value per share, or TBVPS, which represents the real, liquid net worth of a bank.
Over the next 12 months, Consensus estimates call for Atlantic Union Bankshares’s TBVPS to shrink by 7.5% to $19.59, a sour projection.
Final Judgment
Atlantic Union Bankshares isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 0.9× forward P/B (or $30.06 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at one of Charlie Munger’s all-time favorite businesses.
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