First Interstate BancSystem’s 16.5% return over the past six months has outpaced the S&P 500 by 5.3%, and its stock price has climbed to $36.48 per share. This performance may have investors wondering how to approach the situation.
Is now the time to buy First Interstate BancSystem, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think First Interstate BancSystem Will Underperform?
Despite the momentum, we're cautious about First Interstate BancSystem. Here are three reasons we avoid FIBK and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.
Unfortunately, First Interstate BancSystem’s 8.8% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the banking sector.
2. Projected Net Interest Income Growth Shows Limited Upside
Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect First Interstate BancSystem’s net interest income to drop by 1.4%.
3. EPS Trending Down
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.
Sadly for First Interstate BancSystem, its EPS declined by 1.9% annually over the last five years while its revenue grew by 8.8%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
First Interstate BancSystem falls short of our quality standards. With its shares outperforming the market lately, the stock trades at 1.1× forward P/B (or $36.48 per share). This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
Stocks We Would Buy Instead of First Interstate BancSystem
Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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 have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
