Preferred Bank ( NASDAQ:PFBC ), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $68.65 at one point, and dropping to the lows of $61.17. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Preferred Bank’s current trading price of $62.09 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Preferred Bank’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Preferred Bank worth?
According to my valuation model, Preferred Bank seems to be fairly priced at around 4.7% below my intrinsic value, which means if you buy Preferred Bank today, you’d be paying a fair price for it. And if you believe the company’s true value is $65.15, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Preferred Bank’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Preferred Bank generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Preferred Bank’s earnings over the next few years are expected to increase by 57.9%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? PFBC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on PFBC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Preferred Bank. You can find everything you need to know about Preferred Bank in the latest infographic research report . If you are no longer interested in Preferred Bank, you can use our free platform to see my list of over 50 other stocks with a high growth potential .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org .