3 Reasons to Sell ZION and 1 Stock to Buy Instead

Zions Bancorporation trades at $56.52 per share and has stayed right on track with the overall market, gaining 19.7% over the last six months. At the same time, the S&P 500 has returned 15.5%.

Is now the time to buy Zions Bancorporation, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is Zions Bancorporation Not Exciting?

We don't have much confidence in Zions Bancorporation. Here are three reasons we avoid ZION and a stock we'd rather own.

1. Net Interest Income Points to Soft Demand

While bank generate revenue from multiple sources, investors view net interest income as a cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of one-time fees.

Zions Bancorporation’s net interest income has grown at a 2.7% annualized rate over the last five years, much worse than the broader banking industry and in line with its total revenue.

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 Zions Bancorporation’s net interest income to drop by 39%, a decrease from its 27.6% annualized growth for the past two years. This projection is below its 27.6% annualized growth rate for the past two years.

3. Growing TBVPS Reflects Strong Asset Base

Tangible book value per share (TBVPS) serves as a key indicator of a bank’s financial strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during financial distress.

Although Zions Bancorporation’s TBVPS was flat over the last five years. the good news is that its growth has recently accelerated as TBVPS grew at an incredible 20.1% annual clip over the past two years (from $25.52 to $36.81 per share).

Final Judgment

Zions Bancorporation’s business quality ultimately falls short of our standards. That said, the stock currently trades at 1.2× forward P/B (or $56.52 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. Let us point you toward a safe-and-steady industrials business benefiting from an upgrade cycle.

Stocks We Would Buy Instead of Zions Bancorporation

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