Equitable Holdings currently trades at $52.32 per share and has shown little upside over the past six months, posting a small loss of 3.4%. The stock also fell short of the S&P 500’s 5.8% gain during that period.

Is now the time to buy Equitable 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 Do We Think Equitable Holdings Will Underperform?

We're cautious about Equitable Holdings. Here are three reasons why you should be careful with EQH and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Insurance companies generate revenue three ways. The first is the core insurance business itself, represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected but not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from policy administration, annuities, and other value-added services.

Unfortunately, Equitable Holdings’s 1.4% annualized revenue growth over the last five years was weak. This was below our standards.

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.

Equitable Holdings’s weak 2.8% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.

3. Declining BVPS Reflects Erosion of Asset Value

In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.

To the detriment of investors, Equitable Holdings’s BVPS declined at a 30.9% annual clip over the last two years.

Final Judgment

Equitable Holdings doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 13× forward P/B (or $52.32 per share). This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere. We’d suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

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