What Does Esquire Financial Holdings, Inc.'s (NASDAQ:ESQ) Share Price Indicate?
Esquire Financial Holdings, Inc. (NASDAQ:ESQ), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NASDAQCM over the last few months. Less-covered, small caps 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 the stock still be trading at a low price relative to its actual value? Let’s take a look at Esquire Financial Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Esquire Financial Holdings
Is Esquire Financial Holdings still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.11x is currently trading slightly above its industry peers’ ratio of 12.74x, which means if you buy Esquire Financial Holdings today, you’d be paying a relatively fair price for it. And if you believe that Esquire Financial Holdings should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Esquire Financial Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Esquire Financial Holdings 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. 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 27% over the next year, the near-term future seems bright for Esquire Financial Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? ESQ’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 financial strength of the company. Have these factors changed since the last time you looked at ESQ? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping an eye on ESQ, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for ESQ, 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 Esquire Financial Holdings. You can find everything you need to know about Esquire Financial Holdings in the latest infographic research report. If you are no longer interested in Esquire Financial Holdings, 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.
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