BBT

We rate BERKSHIRE HILLS BANCORP INC (BBT) as a Reduce with a composite score of 40.5/100 at a current price of $30.74. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (61th percentile) and stability (54th percentile), which together account for the majority of the composite score. Offsetting weakness in value (12th percentile) and investment (26th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), Low uncertainty, and Standard capital allocation.

Key items to watch: sustainability of the current growth rate; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

BERKSHIRE HILLS BANCORP INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.5/100 places it at rank #3472 in our full 7,333-stock universe. At $1.1B in market capitalization, BERKSHIRE HILLS BANCORP INC is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 72% and momentum in the 61th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 26th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of -33% (-50.3pp vs sector) and net margins of 17.5%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $30.74, BERKSHIRE HILLS BANCORP INC is trading at a premium to fundamental value. Our value factor score of 12/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 42.8x (a 259% premium to the sector median of 11.9x), EV/EBITDA of 57.3x (at a premium), P/B of 1.1x, P/S of 4.7x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to BERKSHIRE HILLS BANCORP INC. The company exhibits strong financial stability with a beta of 0.79, conservative leverage (45% D/E), and a stability factor in the 54th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: weak quality scores (28th percentile); elevated valuation multiple (P/E 42.8x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 54th percentile and quality factor at the 28th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 3.84% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate BERKSHIRE HILLS BANCORP INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 2.6%, and the balance sheet is managed within acceptable parameters (D/E: 45%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; BERKSHIRE HILLS BANCORP INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 3.84% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, BERKSHIRE HILLS BANCORP INC receives a Reduce rating with a composite score of 40.5/100 (rank #3472 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 36/100.

Our analysis does not support a constructive view on BERKSHIRE HILLS BANCORP INC at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.