First Bancorp’s 23.7% return over the past six months has outpaced the S&P 500 by 16.1%, and its stock price has climbed to $64.78 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now the time to buy First Bancorp, 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 First Bancorp Not Exciting?
We’re glad investors have benefited from the price increase, but we’re swiping left on First Bancorp for now. Here are three reasons why FBNC doesn’t excite us, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investment banking, and trading fees.
Unfortunately, First Bancorp’s 8.2% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the banking sector.
2. 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 First Bancorp’s net interest income to rise by 4.4%, a deceleration versus its 9.9% annualized growth for the past two years. This projection is below its 9.9% annualized growth rate for the past two years.
3. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
First Bancorp’s unimpressive 6.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
First Bancorp isn’t a terrible business, but it doesn’t pass our bar. With its shares beating the market recently, the stock trades at 1.6× forward P/B (or $64.78 per share). Investors with a higher risk tolerance might like the company, 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 the most entrenched endpoint security platform on the market.
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