Paramount Group Inc (NYSE:PGRE), a reits company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $15.85 at one point, and dropping to the lows of $13.86. 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 Paramount Group’s current trading price of $14.07 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Paramount Group’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 Paramount Group
Is Paramount Group still cheap?
According to my valuation model, the stock is currently overvalued by about 42%, trading at US$14.07 compared to my intrinsic value of $9.94. This means that the opportunity to buy Paramount Group at a good price has disappeared! Another thing to keep in mind is that Paramount Group’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 Paramount Group look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Paramount Group, at least in the near future.
What this means for you:
Are you a shareholder? If you believe PGRE 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. Given the uncertainty from negative growth in the future, this could be the right time to reduce your total portfolio risk. 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 PGRE 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 track record of its management. 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 Paramount Group. You can find everything you need to know about Paramount Group in the latest infographic research report. If you are no longer interested in Paramount 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.