Home Bancorp Inc (NASDAQ:HBCP), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $44.67 at one point, and dropping to the lows of $39.63. 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 HBCP’s current trading price of $42.24 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 HBCP’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Home Bancorp
What is HBCP worth?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that HBCP’s ratio of 16.4x is trading slightly below its industry peers’ ratio of 19.1x, which means if you buy HBCP today, you’d be paying a fair price for it. And if you believe HBCP should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like HBCP’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because HBCP’s stock is less volatile than the wider market given its low beta.
What does the future of HBCP look like?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at HBCP future expectations. With profit expected to grow by 41.61% over the next couple of years, the future seems bright for HBCP. 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? HBCP’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 track record of its management team. Have these factors changed since the last time you looked at HBCP? 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 tabs on HBCP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for HBCP, 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 Home Bancorp. You can find everything you need to know about HBCP in the latest infographic research report. If you are no longer interested in Home Bancorp, 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.