Even though BOK Financial (currently trading at $142.80 per share) has gained 6.3% over the last six months, it has lagged the S&P 500’s 11.8% return during that period. This may have investors wondering how to approach the situation.
Is now the time to buy BOK Financial, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is BOK Financial Not Exciting?
We don’t have much confidence in BOK Financial. Here are three reasons why BOKF doesn’t excite us, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
Net interest income and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.
Regrettably, BOK Financial’s revenue grew at a sluggish 3.4% compounded annual growth rate over the last five years. This fell short of our benchmark for the banking sector.
2. 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.
BOK Financial’s net interest income has grown at a 4% annualized rate over the last five years, much worse than the broader banking industry and in line with its total revenue.
3. EPS Barely Growing
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.
BOK Financial’s weak 2.8% 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
BOK Financial isn’t a terrible business, but it isn’t one of our picks. With its shares lagging the market recently, the stock trades at 1.4× forward P/B (or $142.80 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We’re fairly confident there are better stocks to buy right now. We’d suggest looking at one of our all-time favorite software stocks.
Stocks We Like More Than BOK Financial
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