QCR Holdings has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 19.7% to $100.47 per share while the index has gained 16.9%.
Is now the time to buy QCR Holdings, 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 QCR Holdings Not Exciting?
We don’t have much confidence in QCR Holdings. Here are three reasons why QCRH doesn’t excite us, plus one stock we’d rather own.
1. Net Interest Income Points to Soft Demand
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
QCR Holdings’s net interest income has grown at a 9.1% annualized rate over the last five years, slightly worse than the broader banking industry and in line with its total revenue. Its growth was driven by an increase in its outstanding loans as its net interest margin, which represents how much a bank earns in relation to its outstanding loan book, was flat throughout that period.
2. Projected Net Interest Income Growth Shows Limited Upside
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 QCR Holdings’s net interest income to rise by 6.7%, a deceleration versus its 10% annualized growth for the past two years. This projection is below its 10% annualized growth rate for the past two years.
Final Judgment
QCR Holdings isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 1.3× forward P/B (or $100.47 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We’re fairly confident there are better investments elsewhere. We’d recommend looking at a top digital advertising platform riding the creator economy.
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