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BCB Bancorp, Inc. (NASDAQ:BCBP), operating in the financial services industry based in United States, saw significant share price movement during recent months on the NASDAQGM, rising to highs of US$14.40 and falling to the lows of US$12.90. 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 BCB Bancorp's current trading price of US$13.80 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 BCB Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is BCB Bancorp still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 11.25x is currently trading slightly below its industry peers’ ratio of 12.77x, which means if you buy BCB Bancorp today, you’d be paying a reasonable price for it. And if you believe BCB Bancorp should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Furthermore, it seems like BCB Bancorp’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will BCB Bancorp generate?
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. 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. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for BCB Bancorp. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? BCBP’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 track record of its management team. Have these factors changed since the last time you looked at BCBP? 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 BCBP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for BCBP, 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 BCB Bancorp. You can find everything you need to know about BCB Bancorp in the latest infographic research report. If you are no longer interested in BCB 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 email@example.com. 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.
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