Flagstar Bancorp, Inc. (NYSE:FBC), operating in the financial services industry based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $35.87 and falling to the lows of $31.15. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Flagstar Bancorp's current trading price of $31.82 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 Flagstar Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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What is Flagstar Bancorp worth?
According to my valuation model, the stock is currently overvalued by about 25.06%, trading at US$31.82 compared to my intrinsic value of $25.44. This means that the opportunity to buy Flagstar Bancorp at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Flagstar Bancorp’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 Flagstar Bancorp look like?
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. Though in the case of Flagstar Bancorp, it is expected to deliver a relatively unexciting earnings growth of 4.4%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Flagstar Bancorp, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in FBC’s future outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe FBC 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 FBC 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 positive outlook 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 Flagstar Bancorp. You can find everything you need to know about Flagstar Bancorp in the latest infographic research report. If you are no longer interested in Flagstar Bancorp, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
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. Thank you for reading.