Ameris Bancorp’s 25.2% return over the past six months has outpaced the S&P 500 by 15.4%, and its stock price has climbed to $84.15 per share. This run-up might have investors contemplating their next move.
Is now the time to buy Ameris 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 Ameris Bancorp Not Exciting?
Despite the momentum, we're sitting this one out for now. Here are three reasons why ABCB doesn't excite us and a 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.
Ameris Bancorp’s net interest income has grown at a 8% annualized rate over the last five years, worse than the broader banking industry. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.
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 Ameris Bancorp’s net interest income to rise by 6.3%, close to its 5.9% annualized growth 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.
Ameris Bancorp’s EPS grew at an unimpressive 6.7% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 1.8% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
Ameris Bancorp isn’t a terrible business, but it doesn’t pass our quality test. With its shares outperforming the market lately, the stock trades at 1.3× forward P/B (or $84.15 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at our favorite semiconductor picks and shovels play.
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