Should You Buy MTY Food Group Inc (TSX:MTY) Now?
MTY Food Group Inc (TSX:MTY), a hotels, restaurants and leisure company based in Canada, saw its share price hover around a small range of $45.9 to $49.9 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MTY’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 MTY
What’s the opportunity in MTY?
The stock is currently trading at $49.26 on the share market, which means it is overvalued by 31% compared to my intrinsic value of $37.51. This means that the opportunity to buy MTY at a good price has disappeared! Another thing to keep in mind is that MTY’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of MTY look like?
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. However, with a negative profit growth of -14.62% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for MTY. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? If you believe MTY is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 tabs on MTY for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MTY Food Group. You can find everything you need to know about MTY in the latest infographic research report. If you are no longer interested in MTY Food Group, 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.
