U.S. markets close in 2 hours 37 minutes
  • S&P 500

    3,710.96
    +63.67 (+1.75%)
     
  • Dow 30

    29,647.99
    +513.00 (+1.76%)
     
  • Nasdaq

    11,002.02
    +172.52 (+1.59%)
     
  • Russell 2000

    1,707.89
    +45.38 (+2.73%)
     
  • Crude Oil

    81.59
    +3.09 (+3.94%)
     
  • Gold

    1,669.00
    +32.80 (+2.00%)
     
  • Silver

    18.86
    +0.53 (+2.88%)
     
  • EUR/USD

    0.9743
    +0.0145 (+1.51%)
     
  • 10-Yr Bond

    3.7490
    -0.2150 (-5.42%)
     
  • GBP/USD

    1.0908
    +0.0177 (+1.65%)
     
  • USD/JPY

    143.9250
    -0.8660 (-0.60%)
     
  • BTC-USD

    19,559.66
    +521.17 (+2.74%)
     
  • CMC Crypto 200

    445.67
    +16.89 (+3.94%)
     
  • FTSE 100

    7,005.39
    +20.80 (+0.30%)
     
  • Nikkei 225

    26,173.98
    -397.89 (-1.50%)
     

When Should You Buy The RMR Group Inc. (NASDAQ:RMR)?

·3 min read

While The RMR Group Inc. (NASDAQ:RMR) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NASDAQCM over the last few months, increasing to US$37.55 at one point, and dropping to the lows of US$32.67. 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 RMR Group's current trading price of US$34.14 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 RMR 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 RMR Group

What is RMR Group worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy RMR Group today, you’d be paying a fair price for it. And if you believe the company’s true value is $39.27, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since RMR Group’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.

What does the future of RMR Group look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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 a negative profit growth of -6.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for RMR Group. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? RMR seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on RMR for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, 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 RMR should the price fluctuate below its true value.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, RMR Group has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

If you are no longer interested in RMR Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.