Riverview Bancorp Inc (NASDAQ:RVSB), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on RVSB’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Riverview Bancorp
What’s the opportunity in RVSB?
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 RVSB’s ratio of 20.1x is trading slightly above its industry peers’ ratio of 19.2x, which means if you buy RVSB today, you’d be paying a relatively fair price for it. And if you believe RVSB 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, RVSB’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 RVSB to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of RVSB 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 RVSB future expectations. In the upcoming year, RVSB’s earnings are expected to increase by 39.66%, 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? RVSB’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 RVSB? 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 tabs on RVSB, 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 RVSB, 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 Riverview Bancorp. You can find everything you need to know about RVSB in the latest infographic research report. If you are no longer interested in Riverview 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.