United Community Banks 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 9.4% to $34.55 per share while the index has gained 7.3%.
Is there a buying opportunity in United Community Banks, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is United Community Banks Not Exciting?
We're swiping left on United Community Banks for now. Here are three reasons why UCB doesn't excite us and a stock we'd rather own.
1. Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. United Community Banks’s recent performance shows its demand has slowed as its annualized revenue growth of 6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
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. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
United Community Banks’s EPS grew at an unimpressive 6.7% compounded annual growth rate over the last five years, lower than its 10% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. Projected TBVPS Growth Is Slim
Tangible book value per share (TBVPS) growth is driven by a bank’s ability to earn more than its cost of capital through lending activities while maintaining a strong balance sheet.
Over the next 12 months, Consensus estimates call for United Community Banks’s TBVPS to grow by 9.3% to $24.20, paltry growth rate.
Final Judgment
United Community Banks isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 1.1× forward P/B (or $34.55 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere. We’d suggest looking at one of our all-time favorite software stocks.
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