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Bank of Queensland Limited (ASX:BOQ), operating in the financial services industry based in Australia, received a lot of attention from a substantial price movement on the ASX over the last few months, increasing to AU$9.92 at one point, and dropping to the lows of AU$8.84. 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 Bank of Queensland's current trading price of AU$9.54 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 Bank of Queensland’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 Bank of Queensland
Is Bank of Queensland still cheap?
Bank of Queensland appears to be overvalued by 26% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$9.54 on the market compared to my intrinsic value of A$7.59. This means that the opportunity to buy Bank of Queensland at a good price has disappeared! In addition to this, it seems like Bank of Queensland’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.
Can we expect growth from Bank of Queensland?
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. 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 the company's future expectations. Though in the case of Bank of Queensland, it is expected to deliver a relatively unexciting earnings growth of 2.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in BOQ’s future outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe BOQ 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.