Is First Bancorp (NASDAQ:FBNC) A Financial Leader?
First Bancorp (NASDAQ:FBNC), a US$1.19b small-cap, operates in the banking industry, which has recently been facing serious existential threats resulting from potential disintermediation and disruption from new technology. Financial services analysts are forecasting for the entire industry, a highly optimistic growth of 40.0% in the upcoming year , and an enormous growth of 58.1% 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 First Bancorp is lagging or leading in the industry.
View our latest analysis for First Bancorp
What’s the catalyst for First 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 previous year, the industry saw growth in the teens, though still underperforming the wider US stock market. First Bancorp leads the pack with its impressive earnings growth of over 100% last year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 26.1% compared to the wider banking sector growth hovering in the forties next year. As a future industry laggard in growth, First Bancorp may be a cheaper stock relative to its peers.
Is First Bancorp and the sector relatively cheap?
The banking industry is trading at a PE ratio of 18.02x, in-line with the US stock market PE of 20.8x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 8.1% compared to the market’s 10.4%, potentially indicative of past headwinds. On the stock-level, First Bancorp is trading at a PE ratio of 16.14x, which is relatively in-line with the average banking stock. In terms of returns, First Bancorp generated 9.8% in the past year, which is 1.6% over the banking sector.
Next Steps:
If First Bancorp has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a banking industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the financial sector. However, before you make a decision on the stock, I suggest you look at First 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 FBNC’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 First 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 editorial-team@simplywallst.com.
