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Hope Bancorp, Inc. (NASDAQ:HOPE), 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 $14.4 at one point, and dropping to the lows of $12.37. 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 Hope Bancorp's current trading price of $13.22 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 Hope Bancorp’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Hope Bancorp
Is Hope Bancorp still cheap?
Great news for investors – Hope Bancorp is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $18.2, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Hope Bancorp’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Hope 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. Though in the case of Hope Bancorp, it is expected to deliver a negative earnings growth of -3.2%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although HOPE is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to HOPE, 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 HOPE 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.