By Rob Otman
First Republic Bank (NYSE: FRC) is a $15 billion company today. Investors that bought shares one year ago are sitting on a -0.58% total return. That’s below the S&P 500’s return of 13.99%.
First Republic Bank stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: First Republic Bank reported a recent EPS growth rate of 5.66%. That’s below the banking industry average of 67.55%. That’s not a good sign. We like to see companies that have higher earnings growth.
✗ Price-to-Earnings (P/E): The average price-to-earnings ratio of the banking industry is 16.21. And First Republic Bank’s ratio comes in at 20.35. Its valuation looks expensive compared to many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for First Republic Bank stock is 128.82%. That’s below the banking industry average of 212.80%. That’s a good sign. First Republic Bank’s debt levels are not out of control.
✓ Free Cash Flow per Share Growth: First Republic Bank has increased its FCF per share over the last year relative to its competitors. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of First Republic Bank comes in at 27.79% today. And generally, the higher, the better. We also like to see this ratio above competitors. First Republic Bank’s profit margin is below the banking average of 27.87%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for First Republic Bank is 11.11% and that’s below its industry average ROE of 12.68%.
First Republic Bank stock passes two of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold with Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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