At CA$111, Is It Time To Put Morguard Corporation (TSE:MRC) On Your Watch List?
Morguard Corporation (TSE:MRC), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$114 and falling to the lows of CA$103. 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 Morguard's current trading price of CA$111 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 Morguard’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 Morguard
What Is Morguard Worth?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Morguard’s ratio of 16.11x is trading slightly above its industry peers’ ratio of 16.11x, which means if you buy Morguard today, you’d be paying a relatively reasonable price for it. And if you believe Morguard should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Morguard’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 kind of growth will Morguard generate?
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 a relatively muted revenue growth of 0.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Morguard, at least in the short term.
What This Means For You
Are you a shareholder? MRC’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at MRC? Will you have enough conviction to buy should the price fluctuate below the the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on MRC, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Morguard has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.
If you are no longer interested in Morguard, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
