Preferred Bank trades at $93.82 and has moved in lockstep with the market. Its shares have returned 6.5% over the last six months while the S&P 500 has gained 9.7%.
Is now a good time to buy PFBC? Find out in our full research report, it’s free.
Why Does Preferred Bank Spark Debate?
Founded in 1991 with a focus on serving the Pacific Rim community in Southern California, Preferred Bank (NASDAQ:PFBC) is a commercial bank that provides banking products and services to small and mid-sized businesses, entrepreneurs, real estate developers, and high net worth individuals.
Two Things to Like:
1. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Preferred Bank’s EPS grew at an astounding 14.8% 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.
2. Steady Increase in TBVPS Highlights Solid Asset Growth
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.
Preferred Bank’s TBVPS increased by 12.9% annually over the last five years, and the past two years show a similar trajectory as TBVPS grew at a solid 13.1% annual clip (from $47.04 to $60.19 per share).
One Reason to be Careful:
Revenue Tumbling Downwards
We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. Preferred Bank’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.4% over the last two years. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
Final Judgment
Preferred Bank has huge potential even though it has some open questions, but at $93.82 per share (or 1.5× forward P/B), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Preferred Bank
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