Berkshire Hills Bancorp Inc (NYSE:BHLB), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $43.15 at one point, and dropping to the lows of $32.43. 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 Berkshire Hills Bancorp’s current trading price of $34.58 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 Berkshire Hills 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 Berkshire Hills Bancorp?The stock is currently trading at US$34.58 on the share market, which means it is overvalued by 41.23% compared to my intrinsic value of $24.49. Not the best news for investors looking to buy! In addition to this, it seems like Berkshire Hills Bancorp’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Berkshire Hills 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. 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. Berkshire Hills Bancorp’s earnings over the next few years are expected to increase by 61%, 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? BHLB’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BHLB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on BHLB for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for BHLB, which means 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 Berkshire Hills Bancorp. You can find everything you need to know about Berkshire Hills Bancorp in the latest infographic research report. If you are no longer interested in Berkshire Hills Bancorp, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.