Bank of Marin Bancorp (NASDAQ:BMRC), a US$612.3m small-cap, operates in the banking industry, which now face the choice of either being disintermediated or proactively disrupting their own business models to thrive in the future. Financial services analysts are forecasting for the entire industry, an extremely elevated growth of 36.6% in the upcoming year , and an enormous growth of 44.6% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Bank of Marin Bancorp is lagging or leading in the industry.
What’s the catalyst for Bank of Marin Bancorp’s sector growth?
The threat of disintermediation in the payments industry is both real and imminent, taking profits away from traditional incumbent financial institutions. In the past year, the industry delivered growth in the teens, though still underperforming the wider US stock market. Bank of Marin Bancorp lags the pack with its negative growth rate of -8.3% over the past year, which indicates the company has been growing at a slower pace than its banking peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 58.7% in the upcoming year. This future growth may make Bank of Marin Bancorp a more expensive stock relative to its peers.
Is Bank of Marin Bancorp and the sector relatively cheap?
Banking companies are typically trading at a PE of 17.93x, in-line with the US stock market PE of 19.89x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 8.2% compared to the market’s 10.6%, potentially indicative of past headwinds. On the stock-level, Bank of Marin Bancorp is trading at a higher PE ratio of 28.31x, making it more expensive than the average banking stock. In terms of returns, Bank of Marin Bancorp generated 6.7% in the past year, which is 1.5% below the banking sector.
Bank of Marin Bancorp’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Bank of Marin Bancorp has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other banking companies. However, before you make a decision on the stock, I suggest you look at Bank of Marin Bancorp’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has BMRC’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bank of Marin Bancorp? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.