U.S. Markets close in 6 hrs 13 mins

When Should You Buy Elevate Credit, Inc. (NYSE:ELVT)?

Simply Wall St

Elevate Credit, Inc. (NYSE:ELVT), which is in the consumer finance business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$4.55 at one point, and dropping to the lows of US$3.77. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Elevate Credit's current trading price of US$3.99 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 Elevate Credit’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Elevate Credit

Is Elevate Credit still cheap?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.21x is currently trading slightly below its industry peers’ ratio of 8.45x, which means if you buy Elevate Credit today, you’d be paying a reasonable price for it. And if you believe Elevate Credit should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Is there another opportunity to buy low in the future? Since Elevate Credit’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

Can we expect growth from Elevate Credit?

NYSE:ELVT Past and Future Earnings, December 10th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Elevate Credit’s earnings over the next few years are expected to increase by 54%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ELVT’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at ELVT? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on ELVT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for ELVT, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Elevate Credit. You can find everything you need to know about Elevate Credit in the latest infographic research report. If you are no longer interested in Elevate Credit, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.