3 Reasons VLY is Risky and 1 Stock to Buy Instead

3 Reasons VLY is Risky and 1 Stock to Buy Instead

Petr Huřťák

Thu, February 19, 2026 at 1:03 PM GMT+9 3 min read

In this article:

VLY

-1.58%

VLYPN

+0.99%

VLYPO

+0.20%

VLYPP

0.00%

^GSPC

-0.25%

Valley National Bank has had an impressive run over the past six months as its shares have beaten the S&P 500 by 27.7%. The stock now trades at $13.12, marking a 34.4% gain. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Valley National Bank, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Do We Think Valley National Bank Will Underperform?

We’re happy investors have made money, but we don’t have much confidence in Valley National Bank. Here are three reasons why VLY doesn’t excite us and a stock we’d rather own.

1. Long-Term Revenue Growth Disappoints

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions.

Regrettably, Valley National Bank’s revenue grew at a mediocre 9.2% compounded annual growth rate over the last five years. This was below our standard for the banking sector.

Valley National Bank Quarterly Revenue

2. Net Interest Income Points to Soft Demand

While bank generate revenue from multiple sources, investors view net interest income as a cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of one-time fees.

Valley National Bank’s net interest income has grown at a 9.5% annualized rate over the last five years, slightly worse than the broader banking industry and in line with its total revenue.

Valley National Bank Trailing 12-Month Net Interest Income

3. EPS Growth Has Stalled

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.

Valley National Bank’s flat EPS over the last five years was below its 9.2% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Valley National Bank Trailing 12-Month EPS (Non-GAAP)

Final Judgment

Valley National Bank doesn’t pass our quality test. With its shares outperforming the market lately, the stock trades at 0.9× forward P/B (or $13.12 per share). At this valuation, there’s a lot of good news priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

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