Even though First Interstate BancSystem (currently trading at $32.13 per share) has gained 12.1% over the last six months, it has lagged the S&P 500’s 18.6% return during that period. This might have investors contemplating their next move.

Is there a buying opportunity in First Interstate BancSystem, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Do We Think First Interstate BancSystem Will Underperform?

We're swiping left on First Interstate BancSystem for now. Here are three reasons why FIBK doesn't excite us and a 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 Interstate BancSystem’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 4.6% 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.

2. EPS Trending Down

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.

Sadly for First Interstate BancSystem, its EPS declined by 3.4% annually over the last five years while its revenue grew by 9.2%. This tells us the company became less profitable on a per-share basis as it expanded.

3. Substandard TBVPS Growth Indicates Limited Asset Expansion

In the banking industry, tangible book value per share (TBVPS) provides the clearest picture of shareholder value, as it focuses on concrete assets while excluding intangible items that may not hold value during challenging times.

To the detriment of investors, First Interstate BancSystem’s TBVPS grew at a tepid 7.6% annual clip over the last two years.

Final Judgment

First Interstate BancSystem doesn’t pass our quality test. With its shares underperforming the market lately, the stock trades at 1× forward P/B (or $32.13 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at one of our top digital advertising picks.

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