3 Reasons to Sell DCOM and 1 Stock to Buy Instead

Over the last six months, Dime Community Bancshares’s shares have sunk to $28, producing a disappointing 12.6% loss - a stark contrast to the S&P 500’s 5.2% gain. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.

Is now the time to buy Dime Community Bancshares, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Dime Community Bancshares Not Exciting?

Even with the cheaper entry price, we don't have much confidence in Dime Community Bancshares. Here are three reasons why we avoid DCOM and a stock we'd rather own.

1. Revenue Tumbling Downwards

We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. Dime Community Bancshares’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 10.2% over the last two years.

2. Net Interest Margin Dropping

Net interest margin represents how much a bank earns in relation to its outstanding loans. It’s one of the most important metrics to track because it shows how a bank’s loans are performing and whether it has the ability to command higher premiums for its services.

Over the past two years, Dime Community Bancshares’s net interest margin averaged 2.5%. Its margin also contracted by 51.7 basis points (100 basis points = 1 percentage point) over that period.

This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean Dime Community Bancshares either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition.

3. EPS Took a Dip Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Dime Community Bancshares, its EPS declined by more than its revenue over the last two years, dropping 35%. This tells us the company struggled to adjust to shrinking demand.

Final Judgment

Dime Community Bancshares isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 0.9× forward P/B (or $28 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 an all-weather company that owns household favorite Taco Bell.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.