Should Your Next Investment In The Financial Industry Be In Global Brokerage Inc (GLBR)?
Global Brokerage Inc (NASDAQ:GLBR), a USD$10.31M small-cap, is a capital market firm operating in an 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 somewhat weaker growth of 8.70% in the upcoming year , and a strong near-term growth of 27.01% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, and also determine whether GLBR is a laggard or leader relative to its financial sector peers. Check out our latest analysis for Global Brokerage
What’s the catalyst for GLBR’s sector growth?
The threat of disintermediation in the capital markets industry is both real and imminent, taking profits away from traditional incumbent financial institutions. Over the past year, the industry saw growth in the teens, beating the US market growth of 4.49%. GLBR lags the pack with its negative growth rate of -71.48% over the past year, which indicates the company will be growing at a slower pace than its capital markets peers. As the company trails the rest of the industry in terms of growth, GLBR may also be a cheaper stock relative to its peers.
Is GLBR and the sector relatively cheap?
The capital markets industry is trading at a PE ratio of 19x, in-line with the US stock market PE of 22x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 11.19% on equities compared to the market’s 9.99%. On the stock-level, GLBR is trading at a lower PE ratio of 0x, making it cheaper than the average capital markets stock.
What this means for you:
Are you a shareholder? GLBR has been a capital markets industry laggard in the past year. This is possibly reflected in the PE ratio, with the stock trading below its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto GLBR as part of your portfolio, or maybe increase your holding. If you’re bearish on the stock, now may not be the best time to sell!
Are you a potential investor? If GLBR has been on your watchlist for a while, now may be the time to dig deeper into the stock. Although the stock delivered lower growth relative to its peers, GLBR is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at GLBR’s other important fundamentals such as the company’s financial health in order to build a holistic investment thesis.
For a deeper dive into Global Brokerage’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other financial stocks instead? Use our free playform to see my list of over 600 other financial companies trading on the market.
To help readers see pass 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.
