PEBK

We rate PEOPLES BANCORP OF NORTH CAROLINA INC (PEBK) as a Hold with a composite score of 54.9/100 at a current price of $38.57. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (82th percentile) and stability (51th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (33th percentile) and investment (47th percentile) tempers our overall conviction. We assign a No Moat rating (39/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. 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.

PEOPLES BANCORP OF NORTH CAROLINA 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 54.9/100 places it at rank #1278 in our full 7,333-stock universe. At $167M in market capitalization, PEOPLES BANCORP OF NORTH CAROLINA 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 outlook is moderately positive, with revenue expanding at 7% and favorable momentum (82th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 27% (+10.2pp vs sector) and net margins of 20.8%, 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 $38.57, PEOPLES BANCORP OF NORTH CAROLINA INC is trading near fair value based on current fundamentals. Our value factor score of 51/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 12.2x (roughly in line with the sector median of 11.9x), EV/EBITDA of 9.4x (at a premium), P/B of 1.4x, P/S of 2.5x. 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 Medium uncertainty rating to PEOPLES BANCORP OF NORTH CAROLINA INC. The stock presents a balanced risk profile: significant leverage (1063% debt-to-equity) and weak quality scores (33th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (1063% debt-to-equity); weak quality scores (33th percentile). 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 51th percentile and quality factor at the 33th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 3.10% 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 PEOPLES BANCORP OF NORTH CAROLINA INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 11.5%, and the balance sheet is managed within acceptable parameters (D/E: 1063%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; PEOPLES BANCORP OF NORTH CAROLINA INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 3.10% 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, PEOPLES BANCORP OF NORTH CAROLINA INC receives a Hold rating with a composite score of 54.9/100 (rank #1278 of 7,333). Our quantitative framework assigns a No Moat (39/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on PEOPLES BANCORP OF NORTH CAROLINA INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.