Eagle Bancorp Inc (NASDAQ:EGBN), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NasdaqCM in the over the last few months, increasing to $68.85 at one point, and dropping to the lows of $49.95. 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 EGBN’s current trading price of $49.95 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 EGBN’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 Eagle Bancorp
Is EGBN still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.4x is currently trading slightly below its industry peers’ ratio of 16.5x, which means if you buy EGBN today, you’d be paying a fair price for it. And if you believe that EGBN should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like EGBN’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because EGBN’s stock is less volatile than the wider market given its low beta.
What does the future of EGBN look like?
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 EGBN future expectations. With profit expected to grow by 21.62% over the next couple of years, the future seems bright for EGBN. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in EGBN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at EGBN? Will you have enough confidence to invest in the company should the price drop below its fair value?