This Bank Stock Could See a Boost From Its Addition to Russell 2000

NASDAQ: UNTY | Unity Bancorp, Inc. News, Ratings, and Charts

UNTY – Unity Bancorp (UNTY) was recently added to the Russell 2000 index. A stock’s addition to an index usually leads to an increase in buying of the stock as several index funds invest in it as part of their strategy of investing in the index participants. Since UNTY is expected to get a boost from its recent addition to the index, will it be wise to invest in the stock? Read on to learn our view….

Unity Bancorp, Inc. (UNTY) is a bank holding company that serves as a holding company for Unity Bank. The company’s primary business is ownership and supervision of the bank.

The company, through the bank, conducts a traditional and community-oriented commercial banking business and offers services, including personal and business checking accounts, time deposits, money market accounts, and regular savings accounts.

It also engages in various lending activities and offers commercial, small business administration, consumer, mortgage, home equity, and personal loans.

UNTY was added to the Russell 2000 index on June 27, 2022. The company holds approximately $2.10 billion in assets and $1.80 billion in deposits.

Unity Bank CEO and President James A. Hughes said, “We are extremely pleased to have been added as a member of the Russell 2000 Index as it illustrates Unity’s continued financial strength and performance.”

UNTY’s entry in the Russell 2000 index should benefit the stock from the ‘index effect.’ Indexes like the Russell 2000 are used by investment managers and institutional investors for managing index funds that invest in the index’s members. Whenever a new stock is added to the index, it usually benefits from the investments of index fund managers.

UNTY’s stock has gained 2.1% in price year-to-date and 16.6% over the past year to close the last trading session at $26.82.

Here’s what could influence UNTY’s performance in the upcoming months:

Robust Financials

UNTY’s total interest income increased 11.5% year-over-year to $23.07 million for the second quarter ended June 30, 2022. The company’s net interest income after provision for loan losses increased 11.5% year-over-year to $20.56 million. Also, its net income increased 12.2% year-over-year to $9.45 million. In addition, its EPS came in at $0.88, representing an increase of 10% year-over-year.

Favorable Analyst Estimates

Analysts expect UNTY’s EPS for fiscal 2022 and 2023 to increase 6.1% and 2.5% year-over-year to $3.64 and $3.73, respectively. Its revenue for fiscal 2022 and 2023 is expected to increase 9.8% and 6.5% year-over-year to $97.82 million and $104.17 million, respectively. It surpassed Street EPS estimates for each of the trailing four quarters.

Mixed Valuation

In terms of forward GAAP P/E, UNTY’s 7.36x is 26.4% lower than the 10.01x industry average. Its forward non-GAAP P/E of 7.38x is 23.6% lower than the 9.67x industry average. Also, the stock’s 14.51x trailing-12-month P/CF is 100% higher than the 7.25x industry average. Its 1.18x forward P/B is 8.3% higher than the 1.09x industry average.

Mixed Profitability

UNTY’s trailing-12-month net income margin of 40.82% is 40.7% higher than the 29.01% industry average. Likewise, its 18.55% trailing-12-month ROCE is 49.4% higher than the 12.41% industry average. The stock’s trailing-12-month Capex/S of 1.21% is lower than the industry average of 1.61%.

POWR Ratings Show Promise

UNTY has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. UNTY has a B grade for Sentiment, consistent with favorable analyst estimates.

It has a C grade for Value, in sync with its mixed valuation. In addition, it has a C grade for Quality, justifying its mixed profitability.

UNTY is ranked #8 out of 63 stocks in the Northeast Regional Banks industry. Click here to access UNTY’s Growth, Momentum, and Stability ratings.

Bottom Line

Following its addition to the Russell 2000 Index, UNTY will likely benefit from the investments of index fund managers. Given its robust financials and favorable analyst estimates, we think it could be wise to add the stock to your portfolio now.

How Does Unity Bancorp, Inc. (UNTY) Stack Up Against its Peers?

UNTY has an overall POWR Rating of B, equating to a Buy rating. You might want to consider investing in the other Northeast Regional Banks stocks with a B (Buy) rating: The Bank of Princeton (BPRN), Meridian Corporation (MRBK), and Western New England Bancorp, Inc. (WNEB).


UNTY shares were unchanged in premarket trading Tuesday. Year-to-date, UNTY has gained 2.94%, versus a -18.98% rise in the benchmark S&P 500 index during the same period.


About the Author: Dipanjan Banchur


Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
UNTYGet RatingGet RatingGet Rating
BPRNGet RatingGet RatingGet Rating
MRBKGet RatingGet RatingGet Rating
WNEBGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Bears Back in Charge...What Happens Next?

A month ago the bulls were claiming victory as they created a charge back over 4,000 for the S&P 500 (SPY). Since then that false narrative has been peeled away and investors are more honestly looking at the bleak outlook formed by high inflation and a hawkish Fed. That explains why we are back retesting the June lows. Now we have to ponder what comes next and how to trade our way to profits. Read on below for the full story...

:  |  News, Ratings, and Charts

2 Warren Buffett Stocks to Buy and Never Sell

Warren Buffett’s long-term value investing strategy serves as a guide for investors to ensure high returns. With the market volatility becoming more severe after the Fed’s recent interest rate hike, Buffett’s top holdings could be ideal investments for long-term investors. To that end, buying and holding Johnson & Johnson (JNJ) and United Parcel Service (UPS) could be wise. Continue reading…

:  |  News, Ratings, and Charts

3 Stocks That’ll Help You Score Big No Matter What Happens Next

The Fed launched another 75-basis-point rate hike this week and signaled it would keep increasing rates until inflation is under control. The consecutive rate hikes are raising recession concerns. We think fundamentally solid stocks Bristol-Myers (BMY), AT&T (T), and Gilead Sciences (GILD), which have the potential to deliver steady returns despite market uncertainties, could be ideal buys now. Keep reading…

:  |  News, Ratings, and Charts

The Most Sought-After Tech Stock to Buy Right Now

Shares of Microsoft (MSFT) have shed more than 25% year-to-date, with the rising interest rates causing a massive tech sell-off. However, the current low price level allows long-term investors to take a position in the stock to benefit from its solid growth prospects. The company has guided double-digit growth for fiscal 2023. Moreover, MSFT has been increasingly paying dividends, which should help generate a steady income stream. Read more…

:  |  News, Ratings, and Charts

3 Stocks That’ll Help You Score Big No Matter What Happens Next

The Fed launched another 75-basis-point rate hike this week and signaled it would keep increasing rates until inflation is under control. The consecutive rate hikes are raising recession concerns. We think fundamentally solid stocks Bristol-Myers (BMY), AT&T (T), and Gilead Sciences (GILD), which have the potential to deliver steady returns despite market uncertainties, could be ideal buys now. Keep reading…

Read More Stories

More Unity Bancorp, Inc. (UNTY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All UNTY News