Cullen/Frost Bankers Inc (NYSE:CFR), operating in the financial services industry based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $115.95 and falling to the lows of $94.54. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Cullen/Frost Bankers’s current trading price of $94.54 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cullen/Frost Bankers’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Cullen/Frost Bankers still cheap?
According to my valuation model, the stock is currently overvalued by about 28.96%, trading at US$94.54 compared to my intrinsic value of $73.31. This means that the opportunity to buy Cullen/Frost Bankers at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Cullen/Frost Bankers’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 does the future of Cullen/Frost Bankers look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Cullen/Frost Bankers’s earnings over the next few years are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? CFR’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CFR should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on CFR for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for CFR, which means 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 Cullen/Frost Bankers. You can find everything you need to know about Cullen/Frost Bankers in the latest infographic research report. If you are no longer interested in Cullen/Frost Bankers, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.