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Is German American Bancorp, Inc. (NASDAQ:GABC) Potentially Undervalued?

Simply Wall St

German American Bancorp, Inc. (NASDAQ:GABC), operating in the financial services industry based in United States, saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$33.05 and falling to the lows of US$29.09. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether German American Bancorp's current trading price of US$31.80 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 German American Bancorp’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 German American Bancorp

What is German American Bancorp worth?

According to my valuation model, German American Bancorp seems to be fairly priced at around 16% below my intrinsic value, which means if you buy German American Bancorp today, you’d be paying a fair price for it. And if you believe that the stock is really worth $37.69, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, German American Bancorp’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from German American Bancorp?

NasdaqGS:GABC Past and Future Earnings, October 14th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. German American Bancorp’s earnings over the next few years are expected to increase by 22%, 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? It seems like the market has already priced in GABC’s positive outlook, 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 the stock? 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 an eye on GABC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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 German American Bancorp. You can find everything you need to know about German American Bancorp in the latest infographic research report. If you are no longer interested in German American Bancorp, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.