What Does McGrath RentCorp’s (NASDAQ:MGRC) Share Price Indicate?
McGrath RentCorp (NASDAQ:MGRC), a commercial services company based in United States, received a lot of attention from a substantial price increase on the NasdaqGS over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine McGrath RentCorp’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View out our latest analysis for McGrath RentCorp
Is McGrath RentCorp still cheap?
According to my valuation model, McGrath RentCorp seems to be fairly priced at around 0.47% below my intrinsic value, which means if you buy McGrath RentCorp today, you’d be paying a fair price for it. And if you believe that the stock is really worth $64.65, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like McGrath RentCorp’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will McGrath RentCorp 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. 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. Though in the case of McGrath RentCorp, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? MGRC seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 MGRC for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears 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 MGRC should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on McGrath RentCorp. You can find everything you need to know about McGrath RentCorp in the latest infographic research report. If you are no longer interested in McGrath RentCorp, 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.
