At $22.85, Is It Time To Buy Textainer Group Holdings Limited (NYSE:TGH)?
Textainer Group Holdings Limited (NYSE:TGH), a trade distributors company based in Bermuda, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $26.4 at one point, and dropping to the lows of $21. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Textainer Group Holdings’s current trading price of $22.85 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Textainer Group Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Textainer Group Holdings
Is Textainer Group Holdings still cheap?
Textainer Group Holdings appears to be overvalued by 86% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$22.85 on the market compared to my intrinsic value of $12.28. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Textainer Group Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Textainer Group Holdings generate?
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 the company’s future expectations. In Textainer Group Holdings’s case, its earnings over the next year are expected to double, indicating an incredibly optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in TGH’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TGH should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TGH for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TGH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Textainer Group Holdings. You can find everything you need to know about Textainer Group Holdings in the latest infographic research report. If you are no longer interested in Textainer Group Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
