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Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NASDAQGM over the last few months, increasing to $15.52 at one point, and dropping to the lows of $13.81. 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 Southern National Bancorp of Virginia's current trading price of $15.18 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 Southern National Bancorp of Virginia’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Southern National Bancorp of Virginia still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. 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 11.6x is currently trading slightly below its industry peers’ ratio of 12.76x, which means if you buy Southern National Bancorp of Virginia today, you’d be paying a fair price for it. And if you believe that Southern National Bancorp of Virginia should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, Southern National Bancorp of Virginia’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of Southern National Bancorp of Virginia look like?
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. However, with a relatively muted profit growth of 2.3% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Southern National Bancorp of Virginia, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SONA’s growth outlook, 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 SONA? 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 an eye on SONA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean 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 Southern National Bancorp of Virginia. You can find everything you need to know about Southern National Bancorp of Virginia in the latest infographic research report. If you are no longer interested in Southern National Bancorp of Virginia, 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 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. Thank you for reading.