Financial News
Flagstar Financial (FLG): Buy, Sell, or Hold Post Q1 Earnings?
Flagstar Financial has had an impressive run over the past six months as its shares have beaten the S&P 500 by 15.5%. The stock now trades at $11.10, marking a 20.7% gain. This run-up might have investors contemplating their next move.
Is there a buying opportunity in Flagstar Financial, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Flagstar Financial Will Underperform?
We’re happy investors have made money, but we're sitting this one out for now. Here are three reasons why there are better opportunities than FLG 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. Flagstar Financial’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 37.2% 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. 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 Flagstar Financial, its EPS declined by 22.2% annually over the last five years while its revenue grew by 17.8%. This tells us the company became less profitable on a per-share basis as it expanded.

3. Declining TBVPS Reflects Erosion of Asset Value
We consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation.
Disappointingly for investors, Flagstar Financial’s TBVPS continued freefalling over the past two years as TBVPS declined at a -23.5% annual clip (from $29.57 to $17.33 per share).

Final Judgment
We cheer for all companies supporting the economy, but in the case of Flagstar Financial, we’ll be cheering from the sidelines. With its shares topping the market in recent months, the stock trades at 0.6× forward P/B (or $11.10 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.
Stocks We Would Buy Instead of Flagstar Financial
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
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