I Overestimated Live Oak Bancshares (Downgrade)
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Daniel JonesInvesting Group LeaderFollow5ShareSavePlay(11min)CommentsSummaryLive Oak Bancshares is downgraded to "Hold" due to mediocre asset quality and expensive valuation relative to peers.Despite impressive deposit and loan growth, LOB's profitability is pressured by declining net interest margins and rising credit loss provisions.LOB's asset quality metrics lag peers, with return on assets at 0.72% and nonperforming loans elevated, even after adjusting for government guarantees.Valuation concerns persist, as LOB trades above preferred price-to-earnings multiples, despite more reasonable price-to-book metrics. Morsa Images/DigitalVision via Getty Images The more that I have analyzed companies in the banking sector over the last few years, the pickier I have become. Honestly, I should have been picky early on. After all, the banking sector carries with it heightened risk compared to non-banking sectors. This requires anThis article was written byDaniel Jones36.01K FollowersFollowDaniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.