Ameris Bancorp has had an impressive run over the past six months as its shares have beaten the S&P 500 by 5.2%. The stock now trades at $90.20, marking a 14.2% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is there a buying opportunity in Ameris Bancorp, or does it present a risk to 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, plus one 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 7.9% annualized rate over the last five years, worse 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. 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 6.4%, close to its 7.9% annualized growth for the past two years.
3. EPS Barely Growing
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.
Ameris Bancorp’s EPS grew at 3.1% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 1.1% 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 isn’t one of our picks. With its shares topping the market in recent months, the stock trades at 1.4× forward P/B (or $90.20 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We’re fairly confident there are better investments elsewhere. We’d recommend looking at our favorite semiconductor picks and shovels play.
Stocks We Would Buy Instead of Ameris Bancorp
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