Customers Bancorp currently trades at $67.85 and has been a dream stock for shareholders. It’s returned 458% since September 2020, blowing past the S&P 500’s 93.3% gain. The company has also beaten the index over the past six months as its stock price is up 33.1% thanks to its solid quarterly results.
Is now still a good time to buy CUBI? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Are We Positive On CUBI?
Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE: CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
Our experience and research show the market cares primarily about a bank’s net interest income growth as one-time fees are considered a lower-quality and non-recurring revenue source.
Customers Bancorp’s net interest income has grown at a 14.7% annualized rate over the last five years, better 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.
2. Outstanding Long-Term EPS Growth
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.
Customers Bancorp’s EPS grew at an astounding 20.7% compounded annual growth rate over the last five years, higher than its 13.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Growing TBVPS Reflects Strong Asset Base
For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.
Customers Bancorp’s TBVPS increased by 18% annually over the last five years, and although its annualized growth has recently decelerated a bit to 15.7% over the last two years (from $42.04 to $56.24 per share), we still think its performance was impressive.
Final Judgment
These are just a few reasons Customers Bancorp is a high-quality business worth owning, and with its shares beating the market recently, the stock trades at 1.2× forward P/B (or $67.85 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.
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