PacWest Bancorp (NASDAQ:PACW), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$39.11 at one point, and dropping to the lows of US$31.67. 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 PacWest Bancorp's current trading price of US$31.67 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at PacWest Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for PacWest Bancorp
What is PacWest Bancorp worth?
Great news for investors – PacWest Bancorp is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $55.12, but it is currently trading at US$31.67 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because PacWest Bancorp’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from PacWest Bancorp?
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. 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 -6.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for PacWest Bancorp. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although PACW is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to PACW, 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 PACW for some time, but hesitant on making the leap, I recommend you dig deeper 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 PacWest Bancorp. You can find everything you need to know about PacWest Bancorp in the latest infographic research report. If you are no longer interested in PacWest 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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