Over the past six months, WSFS Financial’s stock price fell to $53.50. Shareholders have lost 5.8% of their capital, which is disappointing considering the S&P 500 has climbed by 5.3%. This may have investors wondering how to approach the situation.

Given the weaker price action, is now a good time to buy WSFS? Find out in our full research report, it’s free.

Why Does WSFS Stock Spark Debate?

Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ: WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.

Two Positive Attributes:

1. Skyrocketing Revenue Shows Strong Momentum

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees.

Luckily, WSFS Financial’s revenue grew at an impressive 9.2% compounded annual growth rate over the last five years. Its growth beat the average bank company and shows its offerings resonate with customers. 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. Outstanding Long-Term EPS Growth

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.

WSFS Financial’s EPS grew at an astounding 21.8% compounded annual growth rate over the last five years, higher than its 9.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Projected Net Interest Income Growth Is Slim

Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect WSFS Financial’s net interest income to rise by 1.1%.

Final Judgment

WSFS Financial’s merits more than compensate for its flaws. With the recent decline, the stock trades at 1.1× forward P/B (or $53.50 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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