Southside Bancshares Inc (NASDAQ:SBSI), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NasdaqGS in the over the last few months, increasing to $37.1 at one point, and dropping to the lows of $32.95. 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 SBSI’s current trading price of $34.44 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 SBSI’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Southside Bancshares
What is SBSI worth?
According to my relative valuation model, SBSI seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that SBSI’s ratio of 17.9x is trading slightly above its industry peers’ ratio of 16.4x, which means if you buy SBSI today, you’d be paying a relatively reasonable price for it. And if you believe that SBSI should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like SBSI’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because SBSI’s stock is less volatile than the wider market given its low beta.
Can we expect growth from SBSI?
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. With profit expected to grow by 45.08% over the next couple of years, the future seems bright for SBSI. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? SBSI’s optimistic future growth appears to have been factored into the current share price, 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 SBSI? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SBSI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for SBSI, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 Southside Bancshares. You can find everything you need to know about SBSI in the latest infographic research report. If you are no longer interested in Southside Bancshares, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.