Is Unity Bancorp, Inc. overvalued or undervalued?

As of 11 October 2024, Unity Bancorp, Inc. has moved from a fair to very attractive valuation grade. The company is currently considered undervalued, with a P/E ratio of 11, which is lower than the industry average P/E of approximately 11.78. Additionally, the EV to EBITDA ratio stands at 8.33, indicating a favorable valuation compared to peers like Bridgewater Bancshares, Inc. with a P/E of 11.78 and First Business Financial Services, Inc. at 9.42, both of which are in the same sector.
Unity's strong financial performance is highlighted by a ROCE of 16.97% and a ROE of 14.20%. The PEG ratio of 0.87 further supports the argument for undervaluation, as it suggests that the stock is priced attractively relative to its growth potential. Notably, Unity has outperformed the S&P 500 significantly over the past year, with a stock return of 76.23% compared to the S&P 500's 10.26%, reinforcing its strong market position and growth prospects.