As of July 14, 2023, Unity Bancorp Inc (UNTY, Financial) is trading at $24.35, marking a significant change of 5.37% for the day. With a market cap of $245.2 million, an EPS of $3.7, and sales reaching $100.8 million, the company's financial metrics are noteworthy. According to GuruFocus, the GF Value of Unity Bancorp is estimated at $29.7, suggesting that the stock is modestly undervalued.
Unity Bancorp Inc is a bank holding company that serves a wide range of customers through Unity Bank. The company provides a variety of services, including personal and business checking accounts, time deposits, money market accounts, and regular savings accounts. Unity Bancorp has a strong focus on small and medium-sized businesses, professionals, and individuals in its service area. The company also offers commercial, Small Business Administration, consumer, mortgage, home equity, and personal loans.
GF Value and Valuation
The GF Value is a unique indicator that estimates a stock's intrinsic worth based on historical trading multiples, an adjustment factor from GuruFocus, and future business performance estimates. If a stock's price significantly surpasses the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it falls significantly below the GF Value Line, its future return will likely be higher. Given Unity Bancorp's current price, the stock appears to be modestly undervalued.
Given its relative undervaluation, the long-term return of Unity Bancorp's stock is likely to be higher than its business growth. This suggests potential value for investors.
Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company’s financial strength before investing. Unity Bancorp has a cash-to-debt ratio of 0.33, ranking worse than 79.99% of companies in the Banks industry. Based on this, GuruFocus ranks Unity Bancorp’s financial strength as 3 out of 10, indicating a weak balance sheet.
Profitability
Unity Bancorp has been profitable for 10 out of the past 10 years, with revenue of $100.8 million and EPS of $3.7 over the past twelve months. However, its operating margin is 0%, ranking worse than 0% of companies in the Banks industry. GuruFocus ranks Unity Bancorp's profitability at 6 out of 10, indicating fair profitability.
Growth
Unity Bancorp’s 3-year average revenue growth rate is better than 83.05% of companies in the Banks industry. However, the company's 3-year average EBITDA growth rate is 0%, ranking worse than 0% of companies in the Banks industry.
ROIC vs WACC
Comparing a company’s return on invested capital (ROIC) to its weighted average cost of capital (WACC) can evaluate its profitability. Unity Bancorp’s ROIC is 0, while its WACC is 7.74, suggesting potential challenges in generating cash flow relative to the capital invested in the business.
Conclusion
In conclusion, Unity Bancorp (UNTY, Financial) stock appears to be modestly undervalued. Despite its weak financial condition and fair profitability, there may be potential value for long-term investors. To learn more about Unity Bancorp stock, check out its 30-Year Financials here.
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