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What Does EastGroup Properties, Inc.'s (NYSE:EGP) Share Price Indicate?

Simply Wall St

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EastGroup Properties, Inc. (NYSE:EGP), which is in the reits business, and is based in United States, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $109.18 to $119.12. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at EastGroup Properties’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for EastGroup Properties

What is EastGroup Properties worth?

EastGroup Properties appears to be overvalued by 30.91% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$119 on the market compared to my intrinsic value of $91. Not the best news for investors looking to buy! Another thing to keep in mind is that EastGroup Properties’s share price is quite stable relative to 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 EastGroup Properties look like?

NYSE:EGP Past and Future Earnings, July 5th 2019

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. With profit expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for EastGroup Properties. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? EGP’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe EGP 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. 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 an eye on EGP for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for EGP, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on EastGroup Properties. You can find everything you need to know about EastGroup Properties in the latest infographic research report. If you are no longer interested in EastGroup Properties, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.