Independent Bank has been treading water for the past six months, recording a small return of 4.4% while holding steady at $71.05. The stock also fell short of the S&P 500’s 9.7% gain during that period.
Is there a buying opportunity in Independent Bank, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Independent Bank Not Exciting?
We don't have much confidence in Independent Bank. Here are three reasons you should be careful with INDB 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. Independent Bank’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 3.3% 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. Net Interest Margin Dropping
Net interest margin (NIM) represents the unit economics of a bank by measuring the profitability of its interest-bearing assets relative to its interest-bearing liabilities. It's a fundamental metric that investors use to assess lending premiums and returns.
Over the past two years, Independent Bank’s net interest margin averaged 3.3%. Its margin also contracted by 29.7 basis points (100 basis points = 1 percentage point) over that period.
This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean that Independent Bank either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition.
3. EPS Growth Has Stalled
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Independent Bank’s flat EPS over the last five years was below its 7% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Independent Bank isn’t a terrible business, but it isn’t one of our picks. With its shares lagging the market recently, the stock trades at 1× forward P/B (or $71.05 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. Let us point you toward the Amazon and PayPal of Latin America.
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