Axos Financial trades at $94.49 per share and has stayed right on track with the overall market, gaining 7.3% over the last six months. At the same time, the S&P 500 has returned 4.5%.

Is now a good time to buy AX? Find out in our full research report, it’s free.

Why is Axos Financial a good business?

Originally founded as Bank of Internet USA in 1999 before rebranding in 2018, Axos Financial (NYSE: AX) is a diversified financial services company that provides digital banking, securities clearing, and investment advisory solutions to retail and business customers nationwide.

1. Net interest income skyrockets, fueling growth opportunities

Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.

Axos Financial’s net interest income has grown at an 18.2% annualized rate over the last five years, much better than the broader banking industry and in line with its total revenue. 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.

2. Elite net interest margin powers best-in-class loan book

Net interest margin (NIM) represents how much a bank earns in relation to its outstanding loans. It’s one of the most important metrics to track because it shows how a bank’s loans are performing and whether it has the ability to command higher premiums for its services.

Over the past two years, we can see that Axos Financial’s net interest margin averaged an elite 4.7%, indicating the company has a high-yielding loan book and a low cost of funds.

3. Outstanding long-term EPS growth

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.

Axos Financial’s astounding 18.8% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

Final judgment

These are just a few reasons why Axos Financial ranks highly on our list. At $94.49 per share (or 1.5× forward P/B), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks we like even more than Axos Financial

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