Peoples Bancorp has been treading water for the past six months, recording a small return of 2.9% while holding steady at $30.67. The stock also fell short of the S&P 500’s 13.3% gain during that period.
Is now the time to buy Peoples Bancorp, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free for active Edge members.
Why Is Peoples Bancorp Not Exciting?
We don't have much confidence in Peoples Bancorp. Here are three reasons you should be careful with PEBO and a stock we'd rather own.
1. Lackluster Revenue Growth
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. Peoples Bancorp’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.9% over the last two years was well below its five-year trend. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
2. Net Interest Margin Dropping
The net interest margin (NIM) is a key profitability indicator that measures the difference between what a bank earns on its loans and what it pays on its deposits. This metric measures how efficiently one can generate income from its core lending activities.
Over the past two years, Peoples Bancorp’s net interest margin averaged 4.2%. However, its margin contracted by 44.7 basis points (100 basis points = 1 percentage point) over that period.
This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean Peoples Bancorp either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition.
3. EPS Took a Dip Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Peoples Bancorp, its EPS declined by 13.5% annually over the last two years while its revenue grew by 5.9%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Peoples Bancorp isn’t a terrible business, but it doesn’t pass our bar. With its shares lagging the market recently, the stock trades at 0.9× forward P/B (or $30.67 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
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