Live Oak Bancshares has had an impressive run over the past six months as its shares have beaten the S&P 500 by 6.4%. The stock now trades at $38.31, marking a 15.9% gain. This run-up might have investors contemplating their next move.

Is now the time to buy Live Oak Bancshares, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Live Oak Bancshares Not Exciting?

Despite the momentum, we're sitting this one out for now. Here are two reasons why LOB doesn't excite us and a stock we'd rather own.

1. Low Net Interest Margin Hinders Flexibility

Net interest margin (NIM) serves as a critical gauge of a bank's fundamental profitability by showing the spread between interest income and interest expenses. It's essential for understanding whether a firm can sustainably generate returns from its lending operations.

Over the past two years, we can see that Live Oak Bancshares’s net interest margin averaged a subpar 3.3%, indicating the company has weak loan book economics.

2. 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.

Live Oak Bancshares’s EPS grew at a weak 5.4% compounded annual growth rate over the last five years, lower than its 15.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

Live Oak Bancshares isn’t a terrible business, but it doesn’t pass our bar. With its shares outperforming the market lately, the stock trades at 1.4× forward P/B (or $38.31 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at one of our top digital advertising picks.

Stocks We Would Buy Instead of Live Oak Bancshares

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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.