Associated Banc-Corp (NYSE:ASB), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Associated Banc-Corp’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's the opportunity in Associated Banc-Corp?
According to my valuation model, Associated Banc-Corp seems to be fairly priced at around 8.41% above my intrinsic value, which means if you buy Associated Banc-Corp today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $20.05, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Associated Banc-Corp’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Associated Banc-Corp generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 negative profit growth of -12% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Associated Banc-Corp. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? ASB seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ASB for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ASB should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Associated Banc-Corp. You can find everything you need to know about Associated Banc-Corp in the latest infographic research report. If you are no longer interested in Associated Banc-Corp, 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 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.
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