Sofi Technologies (NASDAQ:SOFI) posted excellent second-quarter revenue and earnings on Aug. 12. This was its first quarterly report since SOFI stock went public via a special purpose acquisition company (SPAC) reverse merger.

Sofi now has an $11 billion market valuation but has yet to make a profit for its shareholders. As a result, SOFI stock may not live up to its reputation as a fast-growing millennial stock. For context, the millennial generation makes up most of its loan and brokerage customers.

I suspect it may take some time for SOFI stock to catch up to the underlying fundamentals of its growth and profitability. This is a bit of a change from my previous analysis of the company. But I took a careful look at its balance sheet and valuation now that it reported its financials.

Valuing SOFI Stock Based on Its Balance Sheet

Here is one simple measure that you can use to tether your expectations for the company, which makes most of its revenue by lending out money to millennials. On page 21 of its earnings report, the balance sheet now shows that its shareholders’ equity is $4.2 billion.

But according to Yahoo! Finance, which has the most accurate market capitalization figures in my experience, its market value was $11.05 billion as of Aug. 19.

That means that SOFI stock trades for about 2.61 times its book value. That is a fairly high multiple. For example, Bank of America (NYSE:BAC) trades for just 1.35x its book value. Moreover, JPMorgan (NYSE:JPM) stock is at 1.85x its book value.

However, to be fair, smaller lenders that also cater to millennials like Affirm Holdings (NASDAQ:AFRM) have higher price-to-book value (P/BV) multiples. Affirm’s ratio is 7 times its book value and SLM Corporation (NASDAQ:SLM), a student loan company, has a P/BV ratio of 2.79 times.

Navient Corp (NYSE:NAVI), which also provides student loans, trades for 1.37 times book value. And finally, personal lender company OneMain Holdings (NYSE:OMF) has a 2.13 multiple of its book value. Personal loans, rather than student loans, are Sofi’s main lending category now.

Where This Leaves SOFI

A simple average of these 6 companies shows they trade for 2.75 times book value. This implies that SOFI stock, at 2.61 times book value, is reasonably priced at $13.82 as of Aug. 19.

But on that note, it certainly is not going to pop due to a severe undervaluation. That is, it’s likely to tread water here unless its earnings are set to explode.

Analysts forecast that earnings per share will be negative this year and next year. This is after the company posted a loss of $165 million 0r 48 cents earnings per share (EPS) in Q2. However, for 2021, EPS is forecast to be a loss of 72 cents, followed by a loss of 8 cents in 2022.

In fact, it is not until 2024 that analysts expect significant positive EPS of 41 cents, putting SOFI stock on a forward P/E of 33.7x looking three years ahead.

In other words, don’t expect SOFI’s book value to grow very fast. As a result, its price-to-book value is likely to stay the same. I suspect it may be several years before SOFI stock moves significantly higher.

What to do With SOFI Stock

With bank lending stocks, you always want to buy in at prices equal to or lower than their book value. If they are consistently profitable and pay a dividend, you might be willing to buy them below two times book value — like Bank of America and JPM stocks.

The only exception to this rule is if the bank or lending company is on a roll and has a unique ability to make profits for a specific group or large amounts of non-lending profits. That is what Sofi is trying to do with its new brokerage firm and other lines. Unfortunately, these are still small portions of its overall revenue and earnings.

Therefore, most investors will likely want to wait for the stock to grow into its valuation at the present time. this may take a year or so before there is enough info for investors to judge the consistency and pattern of its growth.

On the date of publication, Mark R. Hake did not hold any position in any of the securities mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.