Banks use their capital and expertise to help businesses grow while offering consumers essential financial products like mortgages and credit cards. Still, investors are uneasy as banks face challenges from credit quality concerns and potential regulatory changes. These doubts have certainly contributed to banking stocks’ recent underperformance - over the past six months, the industry’s 3.4% gain has fallen behind the S&P 500’s 16.4% rise.
While some banks have strong balance sheets and diversified revenue streams that enable them to thrive in any environment, the odds aren’t great for the ones we’re analyzing today. Keeping that in mind, here are three bank stocks best left ignored.
Simmons First National (SFNC)
Market Cap: $2.62 billion
With roots dating back to 1903 and a presence across Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas, Simmons First National (NASDAQ: SFNC) is a regional bank holding company that provides banking and financial services to individuals and businesses.
Why Do We Think SFNC Will Underperform?
- Muted 1.1% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings per share fell by 9% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Annual tangible book value per share declines of 3.5% for the past five years show its capital management struggled during this cycle
Simmons First National’s stock price of $18.13 implies a valuation ratio of 0.8x forward P/B. Check out our free in-depth research report to learn more about why SFNC doesn’t pass our bar.
Northwest Bancshares (NWBI)
Market Cap: $1.73 billion
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Why Does NWBI Give Us Pause?
- Sales trends were unexciting over the last five years as its 4.2% annual growth was below the typical banking company
- 5.7% annual net interest income growth over the last five years was slower than its banking peers
- Capital trends were unexciting over the last five years as its 1% annual tangible book value per share growth was below the typical banking firm
Northwest Bancshares is trading at $11.80 per share, or 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than NWBI.
Wells Fargo (WFC)
Market Cap: $270.8 billion
Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE: WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.
Why Are We Cautious About WFC?
- Large revenue base makes it harder to expand quickly, and its annual net interest income growth of 2.4% over the last five years was below our standards for the banking sector
- Estimated net interest income growth of 5.3% for the next 12 months is soft and implies weaker demand
- Net interest margin dropped by 45.3 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
At $86.21 per share, Wells Fargo trades at 1.6x forward P/B. Read our free research report to see why you should think twice about including WFC in your portfolio.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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