The past six months have been a windfall for Axos Financial’s shareholders. The company’s stock price has jumped 40.8%, hitting $84.21 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is AX a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive On Axos Financial?
Originally founded as Bank of Internet USA in 1999 before rebranding in 2018, Axos Financial (NYSE:AX) is a diversified financial services company that provides digital banking, securities clearing, and investment advisory solutions to retail and business customers nationwide.
1. Net Interest Income Skyrockets, Fueling Growth Opportunities
While bank generate revenue from multiple sources, investors view net interest income as a cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of one-time fees.
Axos Financial’s net interest income has grown at a 15.9% annualized rate over the last five years, much better than the broader banking industry and in line with its total revenue. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.
2. Elite Net Interest Margin Powers Best-In-Class Loan Book
Net interest margin (NIM) serves as a critical gauge of a bank's fundamental profitability by showing the spread between interest income and interest expenses. It's essential for understanding whether a firm can sustainably generate returns from its lending operations.
Over the past two years, we can see that Axos Financial’s net interest margin averaged an elite 4.8%, indicating the company has a high-yielding loan book and a low cost of funds.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Axos Financial’s astounding 18.2% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
These are just a few reasons why we think Axos Financial is an elite banking company, and after the recent rally, the stock trades at 1.5× forward P/B (or $84.21 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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