Provident Financial Services trades at $22.05 and has moved in lockstep with the market. Its shares have returned 13.3% over the last six months while the S&P 500 has gained 10%.
Is now the time to buy Provident Financial Services, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Provident Financial Services Not Exciting?
We're sitting this one out for now. Here are three reasons we avoid PFS and a stock we'd rather own.
1. Low Net Interest Margin Hinders Flexibility
The net interest margin (NIM) is a key profitability indicator that measures the difference between what a bank earns on its loans and what it pays on its deposits. This metric measures how efficiently one can generate income from its core lending activities.
Over the past two years, we can see that Provident Financial Services’s net interest margin averaged a subpar 3.4%, reflecting its high servicing and capital costs.
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Provident Financial Services’s EPS grew at a weak 5.2% compounded annual growth rate over the last five years, lower than its 16.8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. Declining TBVPS Reflects Erosion of Asset Value
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.
Provident Financial Services’s TBVPS was flat over the last five years, and the past two years paint an even worse picture as TBVPS declined at a -1% annual clip (from $16.37 to $16.03 per share).
Final Judgment
Provident Financial Services isn’t a terrible business, but it doesn’t pass our bar. That said, the stock currently trades at 1× forward P/B (or $22.05 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at a dominant Aerospace business that has perfected its M&A strategy.
Stocks We Would Buy Instead of Provident Financial Services
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
