Northfield Bancorp Inc (Staten Island NY) (NASDAQ:NFBK), a US$812.57m small-cap, operates in the mortgage and thrifts industry, which is impacted by macroeconomic factors such as interest rate changes and inflation. Financial services analysts are forecasting for the entire industry, a positive double-digit growth of 26.69% in the upcoming year , and a strong near-term growth of 26.12% over the next couple of years. However, this rate came in below the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Northfield Bancorp (Staten Island NY) is a laggard or leader relative to its financial sector peers.
What’s the catalyst for Northfield Bancorp (Staten Island NY)’s sector growth?
The mortgage industry is characterized by stable product offerings, consolidation and increasing levels of external competition. In the previous year, the industry saw growth of 9.49%, though still underperforming the wider US stock market. Northfield Bancorp (Staten Island NY) lags the pack with its negative growth rate of -18.84% over the past year, which indicates the company has been growing at a slower pace than its mortgage and thrifts peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 48.01% in the upcoming year. This future growth may make Northfield Bancorp (Staten Island NY) a more expensive stock relative to its peers.
Is Northfield Bancorp (Staten Island NY) and the sector relatively cheap?
The mortgage and thrifts sector’s PE is currently hovering around 18.93x, relatively similar to the rest of the US stock market PE of 18.19x. 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 6.60% compared to the market’s 11.39%, potentially indicative of past headwinds. On the stock-level, Northfield Bancorp (Staten Island NY) is trading at a higher PE ratio of 27.38x, making it more expensive than the average mortgage and thrifts stock. In terms of returns, Northfield Bancorp (Staten Island NY) generated 4.23% in the past year, which is 2.37% below the mortgage and thrifts sector.
Northfield Bancorp (Staten Island NY)’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Northfield Bancorp (Staten Island NY) has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other mortgage and thrifts companies. However, before you make a decision on the stock, I suggest you look at Northfield Bancorp (Staten Island NY)’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 NFBK’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 Northfield Bancorp (Staten Island NY)? 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 firstname.lastname@example.org.