Nicolet Bankshares (NIC): 3 Reasons We Love This Stock

Nicolet Bankshares’s 16.4% return over the past six months has outpaced the S&P 500 by 13.8%, and its stock price has climbed to $157.39 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is it too late to buy NIC? Find out in our full research report, it’s free.

Why Are We Positive On Nicolet Bankshares?

Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE:NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.

1. Net Interest Income Skyrockets, Fueling Growth Opportunities

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.

Nicolet Bankshares’s net interest income has grown at a 21.9% annualized rate over the last five years, much better than the broader banking industry and faster than its total revenue.

2. Projected Net Interest Income Growth Is Remarkable

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, though some deceleration is natural as businesses become larger.

Over the next 12 months, sell-side analysts expect Nicolet Bankshares’s net interest income to rise by 42.2%, an improvement versus its 17.5% annualized growth for the past two years.

3. Increasing Net Interest Margin Juices Financials

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, Nicolet Bankshares’s net interest margin averaged 3.6%, climbing by 65 basis points (100 basis points = 1 percentage point) over that period.

This expansion was a tailwind for its net interest income, and while prevailing interest rates matter the most for industry net interest margins, banks that consistently increase this figure generally boast higher-earning loan books (all else equal such as the risk of those loans) or provide differentiated services that give them the ability to charge higher rates (pricing power).

Final Judgment

These are just a few reasons Nicolet Bankshares is a high-quality business worth owning, and with its shares topping the market in recent months, the stock trades at 1.9× forward P/B (or $157.39 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.

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