First Financial Bancorp trades at $29.40 per share and has stayed right on track with the overall market, gaining 10.6% over the last six months. At the same time, the S&P 500 has returned 6.5%.
Is now the time to buy First Financial 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 First Financial Bancorp Not Exciting?
We're swiping left on First Financial Bancorp for now. Here are three reasons why FFBC doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees.
Regrettably, First Financial Bancorp’s revenue grew at a tepid 7.8% compounded annual growth rate over the last five years. This was below our standard for the banking sector.
2. 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.
First Financial Bancorp’s net interest income has grown at a 7.1% annualized rate over the last five years, worse than the broader banking industry and in line with its total revenue. 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.
3. Recent EPS Growth Below Our Standards
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
First Financial Bancorp’s weak 2.8% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
First Financial Bancorp isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 1× forward P/B (or $29.40 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of First Financial Bancorp
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