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Bear of the Day: Bankunited (BKU)

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Zacks Rank #5 (Strong Sell) stock BankUnited Inc. ((BKU - Free Report) ) is a Miami Lakes, Fl based bank established in 2009. BankUnited’s primary banking markets are Florida and the Tri-State area of New York, New Jersey, and Connecticut.

Rising Expenses

Over the past few years, BankUnited’s expenses have been rising consistently. Inflationary pressures and technology upgrades are keeping the company’s expenses elevated. Furthermore, worsening asset quality and exposure to risky loan portfolios are other headwinds.

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Risky Loan Exposure

Residential and other consumer loans comprise approximately 35% of the company’s loan portfolio. The company also has loan exposure to many industries still recovering from the COVID-19 pandemic, including hotels, airlines, and cruise lines. These high-risk loan exposures may negatively impact the company’s financials moving forward.

Spotty Earnings Picture

Since 2021, BankUnited’s annual earnings per share has been declining. Meanwhile, revenue has remained essentially flat since 2018.

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For the full-year 2023, Zacks Consensus Estimates predict a fall in year-over-year EPS of ~14%.

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Image Source: Zacks Investment Research

Negative ESP Score

With the current earnings already abysmal, the next step is for investors to try to predict the future. BKU earns a Zacks Earnings ESP (Expected Surprise Prediction) score of -2.68%. The Zacks Earnings ESP score is a proprietary ranking that is derived from recent EPS revision activity. Stocks with positive ESP scores tend to beat on EPS and outperform and vice versa. BKU’s negative ESP score suggests that the company will miss earnings expectations when it reports in July and will underperform.

Weak Industry Group

The banking sector has been the weakest area of the equity market in 2023. BankUnited is part of the Zacks Banks – Major Regional Industry Group which holds a poor rank of 232 out of the 250 industries tracked by Zacks (bottom 7%). Because roughly half of a stock’s price movement is beholden to the underlying industry group, BKU is an avoid.

Technical View

Like most banks, BKU is underperforming the general market and showing signs of relative weakness. After finding support near the 2020 pandemic lows, the stock has rallied in the past few weeks to form a bear flag pattern.

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Image Source: Zacks Investment Research


A weak industry, rising costs, and spotty fundamentals are a few reasons investors should avoid BankUnited.

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