FSBW Stock Analysis: Why FS Bancorp Inc Scored 30% in Stock Value Finder

FS Bancorp Inc (FSBW) – A Detailed StockValueFinder Educational Review

Overview of FS Bancorp Inc (FSBW)

FS Bancorp Inc (FSBW) is a regional bank holding company based in the United States, operating primarily in the financial services sector under the "Banks – Regional" industry classification. As a community-focused financial institution, FS Bancorp provides a range of banking services, including personal and business lending, deposit accounts, and wealth management solutions. This educational review from StockValueFinder.com examines FSBW using a structured, number-driven approach to help investors understand how to evaluate financial stocks based on key performance and valuation metrics.

This article is not a recommendation to buy or sell FSBW. Instead, it serves as a practical guide to interpreting financial data, understanding risk factors, and applying disciplined screening criteria. We will analyze each available metric—such as earnings consistency, return on invested capital (ROIC), debt payback, interest coverage, and valuation ratios—using only the supplied data. No assumptions, estimates, or forward-looking statements are made beyond the provided facts.

Why the StockValueFinder Score Matters

FS Bancorp Inc (FSBW) received a StockValueFinder score of **30%**, resulting in an **"AVOID"** rating. This score reflects a systematic evaluation across five core financial tests: earnings per share (EPS) strength, return on invested capital (ROIC), interest coverage, debt payback, and price-to-earnings (P/E) valuation.

A score of 30% means that FSBW passed only **one out of five** key tests. In StockValueFinder’s framework, a passing score typically requires at least **60%**—or three out of five tests—to be considered for further review. The low score signals that, based on the available data, FSBW does not currently meet the platform’s standards for financial quality, efficiency, or valuation discipline.

It’s important to note that a low score does not mean the company is failing or unprofitable. Rather, it indicates that the stock does not align with StockValueFinder’s conservative, quality-focused screening criteria at this time. Investors should use this information as part of a broader due diligence process, not as a final judgment.

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EPS Strength and Consistency

What Is EPS and Why Does It Matter?

Earnings per share (EPS) measures a company’s profitability on a per-share basis. It is calculated by dividing net income by the number of outstanding shares. EPS is a critical indicator of a company’s ability to generate consistent profits over time.

For financial institutions like FS Bancorp, stable and growing EPS is especially important. Banks operate on thin margins and are highly sensitive to economic cycles, interest rate changes, and credit quality. A history of steady or rising EPS suggests effective risk management, strong underwriting standards, and operational resilience.

StockValueFinder’s EPS Test

StockValueFinder evaluates EPS strength based on **consistency and growth trends** over multiple years. While the exact EPS values for FSBW are not supplied, the system recorded a result of **"Did not pass"** for the EPS test.

This means that, based on the available data, FSBW did not demonstrate the level of earnings consistency or growth that StockValueFinder typically requires. For example, a strong EPS profile might show: – Positive EPS in each of the last five years, – Year-over-year growth in at least four of those years, – No single-year declines greater than 10%.

In contrast, a weak EPS profile might include

– Volatile earnings with frequent declines, – Negative EPS in one or more years, – High sensitivity to external shocks (e.g., recessions, interest rate hikes).

Since FSBW did not pass this test, investors should be cautious about assuming stable profitability. However, it’s important to review the actual EPS history—if available—to understand the specific reasons behind the volatility.

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ROIC and Capital Efficiency

What Is ROIC?

Return on invested capital (ROIC) measures how effectively a company uses its capital to generate profits. It is calculated as:

> ROIC = Net Operating Profit After Taxes (NOPAT) / Invested Capital

ROIC is particularly useful for banks because it reflects how well management deploys deposits, loans, and equity to produce returns. A higher ROIC indicates better capital efficiency and a stronger competitive position.

FSBW’s ROIC: 7.43%

FS Bancorp’s ROIC is **7.43%**. StockValueFinder generally considers an ROIC of **10% or higher** as attractive for financial institutions. This threshold reflects the expectation that well-managed banks should earn returns above their cost of capital, which typically ranges between 8% and 12% for regional banks.

#### Why 7.43% Is Considered Weak

At 7.43%, FSBW’s ROIC falls below the 10% benchmark. This suggests that the company is not generating sufficient returns relative to the capital it employs. For comparison: – A bank with a **15% ROIC** is likely using its capital more efficiently, possibly due to strong loan pricing, low credit losses, or operational leverage. – A bank with a **4% ROIC** may be struggling with poor loan demand, high default rates, or excessive overhead costs.

While 7.43% is not disastrous, it does not meet StockValueFinder’s standard for capital efficiency. As a result, the ROIC test was marked as **"Did not pass."**

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Interest Coverage and Financial Safety

What Is Interest Coverage?

Interest coverage measures a company’s ability to pay interest on its outstanding debt. It is calculated as:

> Interest Coverage = Earnings Before Interest and Taxes (EBIT) / Interest Expense

For banks, interest coverage is less commonly used than for industrial companies because banks are in the business of borrowing and lending. However, it can still provide insight into financial stability, particularly for holding companies with debt at the corporate level.

StockValueFinder’s Interest Coverage Standard

StockValueFinder prefers an interest coverage ratio of **6 or higher** for non-financial companies. For financial institutions, the threshold may be adjusted, but the principle remains: higher coverage indicates lower risk of default.

FS Bancorp’s interest coverage test result is **"Did not pass."** While the exact interest coverage ratio is not supplied, this result suggests that FSBW’s ability to service its debt may be weaker than desired.

For example

– A coverage ratio of **8x** means the company earns eight times its annual interest expense, indicating strong financial health. – A coverage ratio of **2x** means the company earns only twice its interest expense, signaling higher risk, especially in a rising rate environment.

Since FSBW did not pass this test, investors should be cautious about the company’s debt management and liquidity position.

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Debt Payback and Balance Sheet Discipline

What Is Debt Payback?

Debt payback measures how many years it would take a company to repay its total debt using its current operating cash flow. It is calculated as:

> Debt Payback (Years) = Total Debt / Operating Cash Flow

A shorter debt payback period indicates a stronger balance sheet and lower financial risk.

FSBW’s Debt Payback: 3.45 Years

FS Bancorp’s debt payback period is **3.45 years**. StockValueFinder prefers a debt payback period of **3 years or less** for most companies, including regional banks. This benchmark reflects a conservative approach to balance sheet management.

#### Why 3.45 Years Is Considered Weak

At 3.45 years, FSBW’s debt payback period slightly exceeds the 3-year threshold. While this is not alarming, it does not meet StockValueFinder’s standard for balance sheet discipline. For comparison: – A debt payback of **1.5 years** suggests a very strong financial position, with ample cash flow to cover obligations. – A debt payback of **7 years** indicates higher leverage and greater vulnerability to economic downturns.

As a result, FSBW’s debt payback test was marked as **"Did not pass."** This does not mean the company is overleveraged, but it does signal that its debt management is not as conservative as StockValueFinder’s preferred standard.

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P/E Ratio and Valuation Discipline

What Is the P/E Ratio?

The price-to-earnings (P/E) ratio compares a company’s stock price to its earnings per share. It is calculated as:

> P/E Ratio = Stock Price / EPS

The P/E ratio is a widely used valuation metric that helps investors assess whether a stock is overpriced, underpriced, or fairly valued relative to its earnings.

FSBW’s P/E Ratio: 11.76

FS Bancorp’s P/E ratio is **11.76**. StockValueFinder generally considers a P/E ratio of **15 or lower** as attractive for valuation discipline, assuming the company’s fundamentals are sound.

#### Why 11.76 Is Considered Attractive

At 11.76, FSBW’s P/E ratio falls below the 15 threshold, indicating that the stock is trading at a relatively low multiple of its earnings. For example: – A P/E of **8** may suggest strong value, assuming the company’s earnings are stable and growing. – A P/E of **40** may indicate an overvalued stock, especially if earnings growth is uncertain.

Since FSBW’s P/E ratio is below 15, it **passed** the P/E valuation test. However, it’s important to note that a low P/E ratio alone does not guarantee a good investment. The quality of earnings, growth prospects, and risk factors must also be considered.

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Moving Average Trend and Entry Timing

What Is the Moving Average Signal?

Moving averages smooth out price data to identify trends over time. StockValueFinder uses moving average signals to assess the **technical trend** of a stock, not its fundamental quality. A "BUY TREND" signal indicates that the stock’s price is above its moving average, suggesting upward momentum.

FSBW’s Moving Average Signal: BUY TREND

FS Bancorp’s moving average signal is **"BUY TREND."** This means the stock’s price is currently above its moving average, which is often interpreted as a bullish technical signal.

However, it’s critical to understand that

– A "BUY TREND" signal does not guarantee future price appreciation. – Technical trends can reverse quickly, especially in volatile markets. – StockValueFinder does not use moving averages as a primary buy or sell signal but rather as a tool for timing discipline.

The system also reports **"Entry Signal: N/A"** and **"Limit Buy Idea: N/A,"** meaning no specific entry or risk levels are provided at this time. Investors should not interpret this as a recommendation to act but rather as an indication that the trend is currently positive from a technical perspective.

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Overall Financial Strengths and Weaknesses

Strengths

1. **Attractive P/E Ratio (11.76):** FSBW’s valuation is relatively low compared to its earnings, which may appeal to value-oriented investors. This is the only test FSBW passed in StockValueFinder’s framework.

2. **Positive Moving Average Trend:** The stock is in a technical "BUY TREND," which may indicate short-term momentum.

Weaknesses

1. **EPS Consistency (Did Not Pass):** The company did not demonstrate the level of earnings stability that StockValueFinder requires. This raises questions about profitability resilience.

2. **ROIC (7.43%):** The return on invested capital is below the 10% benchmark, suggesting suboptimal capital efficiency.

3. **Interest Coverage (Did Not Pass):** The company’s ability to service its debt appears weaker than desired, increasing financial risk.

4. **Debt Payback (3.45 Years):** The debt payback period slightly exceeds the 3-year threshold, indicating less conservative balance sheet management.

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Risks and Limitations

1. Economic Sensitivity

As a regional bank, FS Bancorp is highly sensitive to economic conditions, including

– Interest rate changes (which affect net interest margins), – Credit quality (loan defaults can rise during recessions), – Local economic health (job growth, housing market trends).

2. Low ROIC and EPS Volatility

The combination of a low ROIC (7.43%) and a failed EPS test suggests that FSBW may struggle to generate consistent, high-quality returns. This increases the risk of underperformance relative to peers.

3. Limited Data Transparency

This review is based on a limited set of supplied metrics. Key data points—such as detailed EPS history, loan loss provisions, net interest margin trends, and regulatory capital ratios—are not included. Investors should seek additional information before making decisions.

4. No Dividend or Growth Data

The article does not include information about dividends, payout ratios, or earnings growth. These factors are important for assessing total return potential and shareholder value creation.

5. Technical Trends Are Not Fundamental Strengths

While the "BUY TREND" signal is positive, technical trends can reverse quickly. Investors should not rely on moving averages alone to assess a stock’s long-term potential.

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Educational Conclusion

This StockValueFinder review of FS Bancorp Inc (FSBW) provides a structured, number-driven approach to evaluating regional bank stocks. By breaking down each metric—EPS consistency, ROIC, interest coverage, debt payback, P/E ratio, and moving average trends—we’ve demonstrated how to assess financial quality, efficiency, and valuation discipline.

Key Takeaways for Investors

1. **Understand the Metrics:** – EPS consistency reflects profitability resilience. – ROIC measures capital efficiency (10%+ is preferred). – Interest coverage assesses debt servicing ability (6x+ is preferred). – Debt payback evaluates balance sheet strength (3 years or less is preferred). – P/E ratio helps assess valuation (15 or lower is preferred).

2. **Avoid Over-Reliance on Single Metrics:** FSBW passed only one of five tests (P/E ratio). A low P/E alone does not make a stock a good investment if other fundamentals are weak.

3. **Use Scores as a Starting Point:** A StockValueFinder score of 30% and an "AVOID" rating indicate that FSBW does not currently meet the platform’s conservative standards. This does not mean the stock is a bad investment, but it does suggest that further due diligence is needed.

4. **Combine Fundamental and Technical Analysis:** While FSBW shows a "BUY TREND" in its moving average, technical signals should be used alongside fundamental analysis, not as a substitute.

5. **Acknowledge Data Limitations:** This review is based on a limited set of supplied metrics. Investors should always seek additional information, including regulatory filings, management commentary, and industry reports.

Final Reminder

This article is for **research and educational purposes only**. It is not personal financial advice, investment advice, or a recommendation to buy or sell any security. StockValueFinder’s scoring system is designed to help investors learn how to evaluate stocks systematically, not to predict future performance. All investments carry risk, and past performance is not indicative of future results.

For those interested in learning more about stock evaluation, consider reviewing additional educational resources on financial ratios, sector-specific risks, and portfolio construction. The goal is to make informed, disciplined decisions—not to chase trends or ignore risks.

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Research links: Yahoo Finance | Seeking Alpha | Finviz | SEC Filings