First Citizens BancShares currently trades at $2,070 per share and has shown little upside over the past six months, posting a small loss of 4.6%. The stock also fell short of the S&P 500’s 8.7% gain during that period.
Is now the time to buy First Citizens BancShares, 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 First Citizens BancShares Not Exciting?
We’re sitting this one out for now. Here are three reasons you should be careful with FCNCA, plus one stock we’d rather own.
1. Revenue Tumbling Downwards
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. First Citizens BancShares’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 3.7% over the last two years. 
Note: Quarters not shown were determined to be outliers because they were impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
2. Net Interest Margin Dropping
Net interest margin (NIM) 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, First Citizens BancShares’s net interest margin averaged 3.3%. Its margin also contracted by 74.8 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 that First Citizens 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
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.
Sadly for First Citizens BancShares, its EPS and revenue declined by 5.6% and 3.7% annually over the last two years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, First Citizens BancShares’s low margin of safety could leave its stock price susceptible to large downswings.
Final Judgment
First Citizens BancShares isn’t a terrible business, but it doesn’t pass our bar. With its shares lagging the market recently, the stock trades at 1.1× forward P/B (or $2,070 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. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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