First Capital Realty Inc (TSE:FCR), a real estate company based in Canada, maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$20.03 to CA$21.27. However, does this price actually reflect the true value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at First Capital Realty’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for First Capital Realty
What is First Capital Realty worth?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 10.39x is currently trading in-line with its industry peers’ ratio, which means if you buy First Capital Realty today, you’d be paying a relatively fair price for it. Furthermore, First Capital Realty’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from First Capital Realty?
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. However, with an expected decline of -5.94% in revenues over the next year, short term growth isn’t a driver for a buy decision for First Capital Realty. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, FCR appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on FCR, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on FCR for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on FCR should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on First Capital Realty. You can find everything you need to know about First Capital Realty in the latest infographic research report. If you are no longer interested in First Capital Realty, 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.