Midland States Bancorp, Inc. (NASDAQ:MSBI), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Midland States Bancorp’s outlook and valuation to see if the opportunity still exists.
Is Midland States Bancorp still cheap?
According to my valuation model, Midland States Bancorp seems to be fairly priced at around 2.5% below my intrinsic value, which means if you buy Midland States Bancorp today, you’d be paying a fair price for it. And if you believe the company’s true value is $16.64, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Midland States Bancorp’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Midland States Bancorp 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 -16% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Midland States Bancorp. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, MSBI appears to be trading around its fair value, 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 beneficial 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 an eye on MSBI 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 MSBI 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 Midland States Bancorp. You can find everything you need to know about Midland States Bancorp in the latest infographic research report. If you are no longer interested in Midland States Bancorp, 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.
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. Thank you for reading.