American National Bankshares Inc (NASDAQ:AMNB), 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 $42.8 at one point, and dropping to the lows of $37.5. 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 AMNB’s current trading price of $38.2 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 AMNB’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for AMNB
Is AMNB still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. 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 AMNB’s ratio of 19.1x is trading slightly above its industry peers’ ratio of 16.4x, which means if you buy AMNB today, you’d be paying a relatively fair price for it. And if you believe AMNB should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like AMNB’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 AMNB’s stock is less volatile than the wider market given its low beta.
What kind of growth will AMNB 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. AMNB’s earnings over the next few years are expected to increase by 29.54%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? AMNB’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 AMNB? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on AMNB, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for AMNB, 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 American National Bankshares. You can find everything you need to know about AMNB in the latest infographic research report. If you are no longer interested in American National Bankshares, 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.