Trustmark has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 9.6% to $40.27 per share while the index has gained 10.5%.
Is TRMK a buy right now? Find out in our full research report, it’s free.
Why Does TRMK Stock Spark Debate?
Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ: TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.
Two Positive Attributes:
1. 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.
Trustmark’s EPS grew at an astounding 11.3% compounded annual growth rate over the last five years, higher than its 3.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
2. Growing TBVPS Reflects Strong Asset Base
We consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation.
Trustmark’s TBVPS increased by 7.3% annually over the last five years, and growth has recently accelerated as TBVPS grew at an incredible 21.8% annual clip over the past two years (from $19.38 to $28.74 per share).
One Reason to be Careful:
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.
Unfortunately, Trustmark’s 3.7% annualized revenue growth over the last five years was mediocre. This wasn’t a great result compared to the rest of the banking sector, but there are still things to like about Trustmark.
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.Final Judgment
Trustmark has huge potential even though it has some open questions, but at $40.27 per share (or 1.1× forward P/B), is now the right time to buy the stock? See for yourself in our full research report, it’s free.
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