The Bancorp currently trades at $70.52 and has been a dream stock for shareholders. It’s returned 424% since December 2020, blowing past the S&P 500’s 85.6% gain. The company has also beaten the index over the past six months as its stock price is up 29.5%.
Following the strength, is TBBK a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free for active Edge members.
Why Is The Bancorp a Good Business?
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
The Bancorp’s net interest income has grown at a 16.2% annualized rate over the last five years, better than the broader banking industry. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.
2. Elite Net Interest Margin Powers Best-In-Class Loan Book
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 The Bancorp’s net interest margin averaged an elite 4.6%, indicating the company has a high-yielding loan book and a low cost of funds.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
The Bancorp’s EPS grew at an astounding 33% compounded annual growth rate over the last five years, higher than its 21.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why The Bancorp ranks highly on our list, and with its shares outperforming the market lately, the stock trades at 4.3× forward P/B (or $70.52 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
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