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Customers Bancorp, Inc. (NYSE:CUBI) is considered a high growth stock. However its last closing price of $20.18 left investors wondering whether this growth has already been factored into the share price. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.
What can we expect from Customers Bancorp in the future?
Customers Bancorp’s growth potential is very attractive. The consensus forecast from 6 analysts is extremely positive with earnings per share estimated to surge from current levels of $1.542 to $2.518 over the next three years. On average, this leads to a growth rate of 18% each year, which signals a market-beating outlook in the upcoming years.
Is CUBI’s share price justifiable by its earnings growth?
Customers Bancorp is trading at quite low price-to-earnings (PE) ratio of 13.09x. This tells us the stock is undervalued relative to the current US market average of 18x , and overvalued based on current earnings compared to the Banks industry average of 12.7x .
After looking at CUBI’s value based on current earnings, we can see it seems overvalued relative to other companies in the industry. But, since Customers Bancorp is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 13.09x and expected year-on-year earnings growth of 18% give Customers Bancorp a very low PEG ratio of 0.75x. This means that, when we account for Customers Bancorp’s growth, the stock can be viewed as relatively cheap , based on the fundamentals.
What this means for you:
CUBI’s current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you’re a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Financial Health: Are CUBI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Past Track Record: Has CUBI been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of CUBI’s historicals for more clarity.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.
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. Thank you for reading.