Old National Bank has had an impressive run over the past six months as its shares have beaten the S&P 500 by 5.1%. The stock now trades at $26, marking a 13.5% gain. This performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Old National Bank, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Old National Bank Not Exciting?

We’re happy investors have made money, but we don’t have much confidence in Old National Bank. Here are three reasons why ONB doesn’t excite us, plus one stock we’d rather own.

1. Low Net Interest Margin Hinders Flexibility

Net interest margin (NIM) represents how much a bank earns in relation to its outstanding loans. It’s one of the most important metrics to track because it shows how a bank’s loans are performing and whether it has the ability to command higher premiums for its services.

Over the past two years, we can see that Old National Bank’s net interest margin averaged a subpar 3.5%. This metric is well below other banks, signaling its loans aren’t very profitable.

2. EPS Barely Growing

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Old National Bank’s EPS grew at a weak 5.8% compounded annual growth rate over the last five years, lower than its 26.7% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

3. TBVPS Growth Demonstrates Strong Asset Foundation

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.

Although Old National Bank’s TBVPS increased by a meager 4% annually over the last five years, the good news is that its growth has recently accelerated as TBVPS grew at a decent 11.9% annual clip over the past two years (from $11.15 to $13.96 per share).

Final Judgment

Old National Bank isn’t a terrible business, but it doesn’t pass our bar. With its shares outperforming the market lately, the stock trades at 1.1× forward P/B (or $26 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We’re fairly confident there are better stocks to buy right now. We’d suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

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