United Bankshares, Inc. (West Virginia) – Value Analysis (NASDAQ:UBSI) : September 21, 2017

Capitalcube gives United Bankshares, Inc. (West Virginia) a score of 64.

Our analysis is based on comparing United Bankshares, Inc. (West Virginia) with the following peers – BB&T Corporation, First Citizens BancShares, Inc. Class A, SunTrust Banks, Inc., M&T Bank Corporation, Union Bankshares Corporation, Huntington Bancshares Incorporated, First Community Bancshares, Inc., Capital Bank Financial Corp. Class A, Fifth Third Bancorp and City Holding Company (BBT-US, FCNCA-US, STI-US, MTB-US, UBSH-US, HBAN-US, FCBC-US, CBF-US, FITB-US and CHCO-US).

Fundamental Overview

United Bankshares, Inc. (West Virginia) has a fundamental score of 64 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.14 is about median in its peer group.
  • The market expects faster earnings growth from UBSI-US than from its peers and also a turnaround in its current ROE.
  • UBSI-US‘s relatively high profit margins are burdened by capital inefficiency.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • Over the last five years, UBSI-US‘s return on equity has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • Compared with the peers chosen, UBSI-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company is likely overinvesting in a business with only median returns.

Drivers of Margin

  • UBSI-US‘s operations benefit from both a pricing and an operating cost advantage.
  • The company’s comparatively high proportion of net interest income (net interest income/total revenues) of 83.46% versus peer median of 67.12% suggests that UBSI-US‘s lending operations show some differentiation with pricing advantages. Further, UBSI-US‘s pre-tax margin is also more than the peer median (42.30% compared to 32.28%) suggesting relatively low operating costs.
  • The company’s comparatively low proportion of fee based income (i.e. non interest income/total revenues) of 16.54% versus peer median of 32.88% — suggests that UBSI-US‘s operating margins are likely to be more volatile. In addition, UBSI-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 52.88x is around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

United Bankshares, Inc. engages in the provision of commercial and retail banking services and products. It operates through the bank and nonbank subsidiaries which engages in community banking services such as asset management, real property title insurance, investment banking, financial planning, and brokerage services. The company was founded in 1839 and is headquartered in Charleston, WV.