FS Bancorp, Inc. (NASDAQ:FSBW), operating in the financial services industry based in United States, saw significant share price movement during recent months on the NASDAQCM, rising to highs of $51.87 and falling to the lows of $46.4. 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 FS Bancorp's current trading price of $49.94 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 FS Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in FS Bancorp?
Good news, investors! FS Bancorp is still a bargain right now. According to my valuation, the intrinsic value for the stock is $66.18, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that FS Bancorp’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will FS Bancorp generate?
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. However, with a negative profit growth of -4.5% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for FS Bancorp. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although FSBW is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to FSBW, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on FSBW for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on FS Bancorp. You can find everything you need to know about FS Bancorp in the latest infographic research report. If you are no longer interested in FS Bancorp, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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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.