Although BOK Financial (currently trading at $108.77 per share) has gained 10.4% over the last six months, it has trailed the S&P 500’s 16.4% 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? See what our analysts have to say in our full research report, it’s free for active Edge members.

Why Is BOK Financial Not Exciting?

We're swiping left on BOK Financial for now. Here are three reasons there are better opportunities than BOKF and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.

Regrettably, BOK Financial’s revenue grew at a tepid 2.1% compounded annual growth rate over the last five years. This was below our standards.

2. Net Interest Income Points to Soft Demand

Net interest income commands greater market attention due to its reliability and consistency, whereas one-time fees are often seen as lower-quality revenue that lacks the same dependable characteristics.

BOK Financial’s net interest income has grown at a 3.7% annualized rate over the last five years, worse than the broader banking industry.

3. Low Net Interest Margin Reveals Weak Loan Book Profitability

Net interest margin (NIM) represents how much a bank earns in relation to its outstanding loans. It's one of the most important metrics to track because it shows how a bank's loans are performing and whether it has the ability to command higher premiums for its services.

Over the past two years, we can see that BOK Financial’s net interest margin averaged a weak 2.7%, meaning it must compensate for lower profitability through increased loan originations.

Final Judgment

BOK Financial isn’t a terrible business, but it doesn’t pass our bar. With its shares lagging the market recently, the stock trades at 1.1× forward P/B (or $108.77 per share). Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.

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