Even though Northwest Bancshares (currently trading at $12.44 per share) has gained 8.1% over the last six months, it has lagged the S&P 500’s 22.7% return during that period. This might have investors contemplating their next move.

Is now the time to buy Northwest Bancshares, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free for active Edge members.

Why Is Northwest Bancshares Not Exciting?

We're sitting this one out for now. Here are three reasons you should be careful with NWBI and a stock we'd rather own.

1. 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.

Northwest Bancshares’s net interest income has grown at a 5.9% annualized rate over the last five years, worse than the broader banking 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. Substandard TBVPS Growth Indicates Limited Asset Expansion

Tangible book value per share (TBVPS) serves as a key indicator of a bank’s financial strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during financial distress.

Disappointingly for investors, Northwest Bancshares’s TBVPS grew at a sluggish 5.5% annual clip over the last two years.

3. TBVPS Projections Show Stormy Skies Ahead

Tangible book value per share (TBVPS) growth comes from a bank’s ability to profitably lend while maintaining prudent risk management and efficient operations.

Over the next 12 months, Consensus estimates call for Northwest Bancshares’s TBVPS to shrink by 4.3% to $9.43, a sour projection.

Final Judgment

Northwest Bancshares isn’t a terrible business, but it doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 1× forward P/B (or $12.44 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at one of our all-time favorite software stocks.

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