Even though Dime Community Bancshares (currently trading at $29.86 per share) has gained 7.1% 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 Dime Community Bancshares, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Dime Community Bancshares Not Exciting?
We're cautious about Dime Community Bancshares. Here are three reasons there are better opportunities than DCOM and a stock we'd rather own.
1. Revenue Tumbling Downwards
We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. Dime Community Bancshares’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 5.5% 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. 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 Dime Community Bancshares’s net interest margin averaged a poor 2.6%, indicating the company has weak loan book economics.
3. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Dime Community Bancshares’s EPS grew at an unimpressive 3.9% compounded annual growth rate over the last five years, lower than its 14.9% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Dime Community Bancshares’s business quality ultimately falls short of our standards. With its shares lagging the market recently, the stock trades at 1× forward P/B (or $29.86 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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