Is Now An Opportune Moment To Examine Sterling Bancorp (NYSE:STL)?
Sterling Bancorp (NYSE:STL), operating in the financial services industry based in United States, saw its share price hover around a small range of US$19.95 to US$21.58 over the last few weeks. But is this actually reflective of the share value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sterling Bancorp’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 Sterling Bancorp
What's the opportunity in Sterling Bancorp?
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 9.79x is currently trading slightly below its industry peers’ ratio of 12.63x, which means if you buy Sterling Bancorp today, you’d be paying a fair price for it. And if you believe Sterling Bancorp should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Is there another opportunity to buy low in the future? Since Sterling Bancorp’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
Can we expect growth from Sterling Bancorp?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 7.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Sterling Bancorp, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in STL’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 STL? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping an eye on STL, now may not be the most advantageous 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 Sterling Bancorp. You can find everything you need to know about Sterling Bancorp in the latest infographic research report. If you are no longer interested in Sterling 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 editorial-team@simplywallst.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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