2 Reasons to Like CADE (and 1 Not So Much)
Following the drawdown, is now an opportune time to buy CADE? Find out in our full research report, it's free.
With roots dating back to 1885 and a strategic focus on middle-market commercial lending, Cadence Bancorporation (NYSE:CADE) is a bank holding company that provides commercial banking, retail banking, and wealth management services to middle-market businesses and individuals.
Our experience and research show the market cares primarily about a bank's net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.
Cadence Bank's net interest income has grown at a 20% annualized rate over the last four years, much better than the broader bank industry. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.
Tangible book value per share (TBVPS) serves as a key indicator of a bank's financial strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during financial distress.
Cadence Bank's TBVPS increased by 7.3% annually over the last five years, and growth has recently accelerated as TBVPS grew at an incredible 22% annual clip over the past two years (from $14.99 to $22.30 per share).
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. Cadence Bank's recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.3% over the last two years was well below its five-year trend.
Cadence Bank has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 1× forward P/B (or $31.36 per share). Is now a good time to initiate a position? See for yourself in our full research report, it's free.
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