Hanmi Financial Corporation (NASDAQ:HAFC), operating in the financial services industry based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine HAFC’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for Hanmi Financial
Is HAFC still cheap?
According to my relative valuation model, HAFC seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that HAFC’s ratio of 17.3x is trading slightly below its industry peers’ ratio of 17.8x, which means if you buy HAFC today, you’d be paying a reasonable price for it. And if you believe that HAFC should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like HAFC’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because HAFC’s stock is less volatile than the wider market given its low beta.
Can we expect growth from HAFC?
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 HAFC future expectations. With profit expected to grow by 20.04% over the next couple of years, the future seems bright for HAFC. 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 HAFC’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 HAFC? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on HAFC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for HAFC, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.