Interested In Financials? Why Flushing Financial Corporation (NASDAQ:FFIC) May Be The Entry Point
Flushing Financial Corporation (NASDAQ:FFIC), a US$620m small-cap, is a bank operating in an industry, which has recently been facing serious existential threats resulting from potential disintermediation and disruption from new technology. Financial services analysts are forecasting for the entire industry, an extremely elevated growth of 39% in the upcoming year , and a whopping growth of 53% over the next couple of years. However this rate still came in below the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Flushing Financial is lagging or leading in the industry.
View our latest analysis for Flushing Financial
What’s the catalyst for Flushing Financial’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 previous year, the industry saw growth in the teens, though still underperforming the wider US stock market. Flushing Financial lags the pack with its negative growth rate of -17% over the past year, which indicates the company has been growing at a slower pace than its banking peers. Although Flushing Financial is poised to deliver a 29% growth next year, moving it from negative to positive territory, it still lags its industry average rate of growth of 39%.
Is Flushing Financial and the sector relatively cheap?
Banking companies are typically trading at a PE of 17.04x, relatively similar to the rest of the US stock market PE of 19.35x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 8.2% compared to the market’s 10%, potentially indicative of past headwinds. On the stock-level, Flushing Financial is trading at a PE ratio of 15.65x, which is relatively in-line with the average banking stock. In terms of returns, Flushing Financial generated 7.7% in the past year, in-line with its industry average.
Next Steps:
If Flushing Financial has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a banking industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the financial sector. However, before you make a decision on the stock, I suggest you look at Flushing Financial’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 FFIC’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 Flushing Financial? 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.
