Hancock Whitney currently trades at $57.44 per share and has shown little upside over the past six months, posting a middling return of 4.7%.
Is now the time to buy Hancock Whitney, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Hancock Whitney Not Exciting?
We're sitting this one out for now. Here are three reasons why you should be careful with HWC and a stock we'd rather own.
1. Net Interest Income Points to Soft Demand
Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.
Hancock Whitney’s net interest income has grown at a 3.5% annualized rate over the last four years, worse than the broader bank industry.
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 Hancock Whitney’s net interest income to rise by 5.3%.
3. Low Net Interest Margin Hinders Flexibility
Revenue is a fine reference point for banks, but net interest income and margin are better indicators of business quality for banks because they’re balance sheet-driven businesses that leverage their assets to generate profits.
Over the past two years, we can see that Hancock Whitney’s net interest margin averaged a subpar 3.3%, meaning it must compensate for lower profitability through increased loan originations.
Final Judgment
Hancock Whitney’s business quality ultimately falls short of our standards. That said, the stock currently trades at 1.1× forward P/B (or $57.44 per share). Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at the most dominant software business in the world.
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