Meridian Bancorp, Inc. (NASDAQ:EBSB), operating in the financial services industry based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Meridian Bancorp’s outlook and valuation to see if the opportunity still exists.
Is Meridian Bancorp still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.6% below my intrinsic value, which means if you buy Meridian Bancorp today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $12.94, then there’s not much of an upside to gain from mispricing. In addition to this, Meridian Bancorp has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Meridian 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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Meridian Bancorp, at least in the near future.
What this means for you:
Are you a shareholder? Currently, EBSB appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on EBSB for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on EBSB should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Meridian Bancorp. You can find everything you need to know about Meridian Bancorp in the latest infographic research report. If you are no longer interested in Meridian 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 firstname.lastname@example.org. 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.
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. Thank you for reading.