Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
HCI Group, Inc. (NYSE:HCI), which is in the insurance business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $55.71 at one point, and dropping to the lows of $46.91. 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 HCI Group’s current trading price of $47.68 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 HCI Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is HCI Group worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17.63% above my intrinsic value, which means if you buy HCI Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $40.53, there’s only an insignificant downside when the price falls to its real value. Furthermore, HCI Group’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from HCI Group?
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. With profit expected to grow by 23% over the next couple of years, the future seems bright for HCI Group. 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? HCI’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on HCI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 HCI Group. You can find everything you need to know about HCI Group in the latest infographic research report. If you are no longer interested in HCI Group, 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 email@example.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. On rare occasion, data errors may occur. Thank you for reading.