Enterprise Financial Services trades at $67.31 and has moved in lockstep with the market. Its shares have returned 13.9% over the last six months while the S&P 500 has gained 11.8%.
Is there a buying opportunity in Enterprise Financial Services, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Enterprise Financial Services Not Exciting?
We’re passing on Enterprise Financial Services for now. Here are three reasons you should be careful with EFSC, plus one stock we’d rather own.
1. Lackluster Revenue Growth
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. Enterprise Financial Services’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 8.4% over the last two years was well below its five-year trend. 
Note: Quarters not shown were determined to be outliers because they were impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
3. Recent EPS Growth Below Our Standards
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Enterprise Financial Services’s EPS grew at a weak 3.6% compounded annual growth rate over the last two years, lower than its 8.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Enterprise Financial Services isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 1.2× forward P/B (or $67.31 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We’re fairly confident there are better stocks to buy right now. Let us point you toward an all-weather company that owns household favorite Taco Bell.
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