BancFirst (BANF): Buy, Sell, or Hold Post Q3 Earnings?

Over the last six months, BancFirst’s shares have sunk to $107.06, producing a disappointing 17.2% loss - a stark contrast to the S&P 500’s 10.1% gain. This was partly due to its softer quarterly results and might have investors contemplating their next move.

Is now the time to buy BancFirst, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free for active Edge members.

Why Is BancFirst Not Exciting?

Despite the more favorable entry price, we don't have much confidence in BancFirst. Here are three reasons you should be careful with BANF and a stock we'd rather own.

1. Net Interest Income Points to Soft Demand

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

BancFirst’s net interest income has grown at a 9.7% annualized rate over the last five years, slightly 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 BancFirst’s net interest income to rise by 4.5%, close to its 5.5% annualized growth for the past two years.

3. Recent EPS Growth Below Our Standards

While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.

BancFirst’s weak 3.5% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.

Final Judgment

BancFirst isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 1.9× forward P/B (or $107.06 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.

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