East West Bank (EWBC): Buy, Sell, or Hold Post Q2 Earnings?

East West Bank trades at $107.56 per share and has stayed right on track with the overall market, gaining 15.3% over the last six months. At the same time, the S&P 500 has returned 15.6%.

Is EWBC a buy right now? Find out in our full research report, it’s free.

Why Does EWBC Stock Spark Debate?

As the largest independent bank in the U.S. focused on bridging financial services between America and Asia, East West Bancorp (NASDAQ:EWBC) operates a commercial bank that provides personal and business banking services with a unique focus on facilitating U.S.-Asia cross-border transactions.

Two Things to Like:

1. Net Interest Income Drives Additional Growth Opportunities

Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.

East West Bank’s net interest income has grown at a 10.6% annualized rate over the last five years, a step above the broader banking industry and in line with its total revenue. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

East West Bank’s EPS grew at an astounding 15.5% compounded annual growth rate over the last five years, higher than its 10.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Lackluster Revenue Growth

Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. East West Bank’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.4% over the last two years was well below its five-year trend.

Final Judgment

East West Bank’s merits more than compensate for its flaws, but at $107.56 per share (or 1.7× forward P/B), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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