Despite the coronavirus-led chaos, it seems to be a wise idea to add
Unity Bancorp, Inc. ( UNTY Quick Quote UNTY - Free Report) to your portfolio at the moment. Impressive organic growth, strong fundamentals and capital strength might drive the stock higher in the near term.
The company’s current-year earnings estimates have been revised slightly upward over the past 30 days. As a result, it currently carries a Zacks Rank #2 (Buy).
Shares of Unity Bancorp have declined 3.3% over the past six months compared with the
industry’s fall of 5.4%.
Here are a few other factors that make the stock a viable investment option.
Earnings per Share (EPS) Growth: In the last three-five years, the company witnessed EPS growth of 20.84% compared with the industry’s average of 11.21%. While earnings are expected to decline 10.75% in 2020 due to the current economic slowdown and a tough operating backdrop, the same is projected to grow 6.02% in 2021. We believe that the company’s earnings might continue to rise on its solid growth efforts.
Moreover, it has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, with the average beat being 5.15%.
Revenue Strength: Unity Bancorp’s revenues witnessed a CAGR of 14.8% over the past five years (2015-2019). The uptrend is expected to continue in the near term. The top line is projected to increase 13.06% in 2020. Impressive Balance Sheet Growth: The company’s loans and deposits witnessed a CAGR of 12.5% and 8.7%, respectively, over a five-year period (ended 2019). Also, both loan and deposit balances are likely to improve in the quarters ahead. Superior Return on Equity (ROE): Unity Bancorp has an ROE of 13.99%, which is higher than the industry’s ROE of 8.43%. This reflects that the company reinvests its cash more efficiently than its peers. Reasonable Valuation: The stock looks undervalued right now when compared with its broader industry. It currently has a price-to-cash flow ratio of 4.76, lower than the industry average of 7.18. Also, its price-to-earnings (F1) ratio of 5.85 is below the industry’s 10.24.
Moreover, the stock has a
Value Score of A. The Value Style Score condenses all valuation metrics into one actionable score, which helps investors steer clear of 'value traps' and identify stocks that are truly trading at a discount. Other Stocks to Consider
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