Over the past six months, SouthState’s shares (currently trading at $85.98) have posted a disappointing 14.6% loss while the S&P 500 was flat. This might have investors contemplating their next move.
Following the pullback, is this a buying opportunity for SSB? Find out in our full research report, it’s free.
Why Does SouthState Spark Debate?
With roots dating back to the Great Depression era of 1933, SouthState (NYSE:SSB) is a financial holding company that provides banking services, wealth management, and correspondent banking services across six southeastern states.
Two Things to Like:
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.
SouthState’s net interest income has grown at a 13.9% annualized rate over the last four years, better than the broader bank industry. 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. Projected Net Interest Income Growth Is Remarkable
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, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect SouthState’s net interest income to rise by 37.9%, an improvement versus its 5.4% annualized growth for the past two years.
One Reason to be Careful:
Substandard TBVPS Growth Indicates Limited Asset Expansion
For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.
Disappointingly for investors, SouthState’s TBVPS grew at a mediocre 8.6% annual clip over the last two years.
Final Judgment
SouthState’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 1× forward P/B (or $85.98 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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