First Horizon has had an impressive run over the past six months as its shares have beaten the S&P 500 by 8.5%. The stock now trades at $25.07, marking a 16.4% gain. This performance may have investors wondering how to approach the situation.
Is there a buying opportunity in First Horizon, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is First Horizon Not Exciting?
We’re happy investors have made money, but we're swiping left on First Horizon for now. Here are three reasons you should be careful with FHN and a stock we'd rather own.
1. Net Interest Income Points to Soft Demand
Net interest income commands greater market attention due to its reliability and consistency, whereas one-time fees are often seen as lower-quality revenue that lacks the same dependable characteristics.
First Horizon’s net interest income has grown at a 7.3% annualized rate over the last five years, worse than the broader banking 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.
2. Projected Net Interest Income Growth Is Slim
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 Horizon’s net interest income to rise by 3.7%, close to its 3.6% annualized growth for the past two years.
3. EPS Barely Growing
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.
First Horizon’s EPS grew at 5.7% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 3.3% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
First Horizon isn’t a terrible business, but it isn’t one of our picks. With its shares beating the market recently, the stock trades at 1.3× forward P/B (or $25.07 per share). Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. Let us point you toward one of our top digital advertising picks.
Stocks We Would Buy Instead of First Horizon
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week - FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
