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What Does CBTX, Inc.'s (NASDAQ:CBTX) Share Price Indicate?

Simply Wall St

CBTX, Inc. (NASDAQ:CBTX), 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, which tends to lack high analyst coverage, 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? Let’s examine CBTX’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for CBTX

Is CBTX still cheap?

According to my valuation model, CBTX seems to be fairly priced at around 7.92% above my intrinsic value, which means if you buy CBTX today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $27.78, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since CBTX’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 CBTX generate?

NasdaqGS:CBTX Past and Future Earnings, December 9th 2019

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 the company's future expectations. Though in the case of CBTX, it is expected to deliver a negative earnings growth of -6.5%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Currently, CBTX appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CBTX for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CBTX should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CBTX. You can find everything you need to know about CBTX in the latest infographic research report. If you are no longer interested in CBTX, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.