Should You Buy CenterState Bank Corporation (CSFL)?
CenterState Bank Corporation (NASDAQ:CSFL), operating in the financial services industry based in United States, received a lot of attention from a substantial price increase on the NasdaqGS in the over the last few months. Less covered, small-stocks like CSFL sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could CSFL still be trading at a low price relative to its actual value? Let’s examine CSFL’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for CenterState Bank
What's the opportunity in CSFL?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 21.9x is currently trading slightly above its industry peers’ ratio of 18.6x, which means if you buy CSFL today, you’d be paying a relatively fair price for it. And if you believe CSFL should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, CSFL’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for CSFL to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from CSFL?
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. With profit expected to grow by 63.36% over the next year, the near-term future seems bright for CSFL. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in CSFL’s positive outlook, 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 CSFL? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on CSFL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for CSFL, which means it’s worth further examining 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 CenterState Bank. You can find everything you need to know about CSFL in the latest infographic research report. If you are no longer interested in CenterState 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 pass 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.
