FirstSun Capital Bancorp trades at $35.16 per share and has stayed right on track with the overall market, gaining 8.1% over the last six months. At the same time, the S&P 500 has returned 9.9%.
Is there a buying opportunity in FirstSun Capital Bancorp, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is FirstSun Capital Bancorp Not Exciting?
We're cautious about FirstSun Capital Bancorp. Here are three reasons you should be careful with FSUN and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income.
Regrettably, FirstSun Capital Bancorp’s revenue grew at a tepid 7.4% compounded annual growth rate over the last five years. This was below our standard for the banking sector.
2. TBVPS Projections Show Stormy Skies Ahead
The key to tangible book value per share (TBVPS) growth is a bank’s ability to earn consistent returns on its assets that exceed its funding costs and credit losses.
Over the next 12 months, Consensus estimates call for FirstSun Capital Bancorp’s TBVPS to shrink by 2.8% to $37.49, a sour projection.
3. Previous Growth Initiatives Haven’t Impressed
Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, FirstSun Capital Bancorp has averaged an ROE of 9%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.
Final Judgment
FirstSun Capital Bancorp isn’t a terrible business, but it doesn’t pass our quality test. That said, the stock currently trades at 0.9× forward P/B (or $35.16 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 suggest looking at an all-weather company that owns household favorite Taco Bell.
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