Over the last six months, Glacier Bancorp’s shares have sunk to $42.62, producing a disappointing 12.4% loss - a stark contrast to the S&P 500’s 12.8% gain. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy Glacier Bancorp, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Glacier Bancorp Not Exciting?
Despite the more favorable entry price, we’re passing on Glacier Bancorp for now. Here are three reasons you should be careful with GBCI, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Over the last five years, Glacier Bancorp grew its revenue at a mediocre 8.5% compounded annual growth rate. This was below our standard for the banking sector.
2. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Glacier Bancorp, its EPS declined by 4.8% annually over the last five years while its revenue grew by 8.5%. This tells us the company became less profitable on a per-share basis as it expanded.
3. Substandard TBVPS Growth Indicates Limited Asset Expansion
We consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation.
Disappointingly for investors, Glacier Bancorp’s TBVPS grew at a mediocre 9.3% annual clip over the last two years.
Final Judgment
Glacier Bancorp isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 1.3× forward P/B (or $42.62 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re fairly confident there are better investments elsewhere. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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