Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Brookline Bancorp, Inc. (NASDAQ:BRKL), 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 $15.92 and falling to the lows of $14.35. 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 Brookline Bancorp's current trading price of $15.12 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 Brookline Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Brookline Bancorp?
According to my relative valuation model, the stock seems to be currently fairly priced. 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 13.94x is currently trading slightly above its industry peers’ ratio of 12.87x, which means if you buy Brookline Bancorp today, you’d be paying a relatively fair price for it. And if you believe Brookline Bancorp should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Brookline Bancorp’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Brookline Bancorp generate?
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. However, with a relatively muted profit growth of 8.2% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Brookline Bancorp, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in BRKL’s growth outlook, 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 BRKL? 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 BRKL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean it’s worth diving deeper into other factors 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 Brookline Bancorp. You can find everything you need to know about Brookline Bancorp in the latest infographic research report. If you are no longer interested in Brookline 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 firstname.lastname@example.org. 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.