How Does CB Financial Services Inc (NASDAQ:CBFV) Compare To The Financial Sector?
CB Financial Services Inc (NASDAQ:CBFV), a US$174.1m small-cap, operates in the banking industry, which has been simplifying their business and operating models over the last few years, both for economic reasons and to reduce organizational complexity. Financial services analysts are forecasting for the entire industry, a strong double-digit growth of 22.9% in the upcoming year , and a massive growth of 35.6% over the next couple of years. However this rate still came in below the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether CB Financial Services is lagging or leading in the industry.
View our latest analysis for CB Financial Services
What’s the catalyst for CB Financial Services’s sector growth?
The threat of disintermediation in the payments industry is both real and imminent, taking profits away from traditional incumbent financial institutions. In the past year, the industry delivered growth in the teens, though still underperforming the wider US stock market. CB Financial Services lags the pack with its negative growth rate of -18.8% over the past year, which indicates the company has been growing at a slower pace than its banking peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 71.5% in the upcoming year. This future growth may make CB Financial Services a more expensive stock relative to its peers.
Is CB Financial Services and the sector relatively cheap?
The banking industry is trading at a PE ratio of 16.31x, in-line with the US stock market PE of 18.33x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 8.8% compared to the market’s 11.4%, potentially indicative of past headwinds. On the stock-level, CB Financial Services is trading at a higher PE ratio of 23.92x, making it more expensive than the average banking stock. In terms of returns, CB Financial Services generated 4.3% in the past year, which is 4.5% below the banking sector.
Next Steps:
CB Financial Services’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If CB Financial Services has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other banking companies. However, before you make a decision on the stock, I suggest you look at CB Financial Services’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has CBFV’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CB Financial Services? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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 editorial-team@simplywallst.com.
