3 Reasons BKU is Risky and 1 Stock to Buy Instead

BankUnited’s 24.8% return over the past six months has outpaced the S&P 500 by 18.2%, and its stock price has climbed to $48.60 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is now the time to buy BankUnited, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is BankUnited Not Exciting?

We’re happy investors have made money, but we don't have much confidence in BankUnited. Here are three reasons there are better opportunities than BKU 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.

BankUnited’s net interest income has grown at a 5.6% annualized rate over the last five years, worse than the broader banking industry. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.

2. Efficiency Ratio Expected to Falter

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

For the next 12 months, Wall Street expects BankUnited to become less profitable as it anticipates an efficiency ratio of 57.8% compared to 42.5% over the past year.

3. EPS Barely Growing

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

BankUnited’s weak 4.9% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Final Judgment

BankUnited isn’t a terrible business, but it isn’t one of our picks. With its shares beating the market recently, the stock trades at 1.1× forward P/B (or $48.60 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We’d recommend looking at the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of BankUnited

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.