Enduro Royalty Trust (NYSE:NDRO), an energy company based in United States, received a lot of attention from a substantial price increase on the NYSE in the over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Enduro Royalty Trust’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for Enduro Royalty Trust
Is Enduro Royalty Trust still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Enduro Royalty Trust’s ratio of 11.45x is trading slightly below its industry peers’ ratio of 14.82x, which means if you buy Enduro Royalty Trust today, you’d be paying a fair price for it. And if you believe Enduro Royalty Trust should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Enduro Royalty Trust’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Enduro Royalty Trust?
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 revenue expected to more than double in the upcoming year, the future appears to be extremely bright for Enduro Royalty Trust. If expenses can also be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in Enduro Royalty Trust’s positive outlook, 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 Enduro Royalty Trust? 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 Enduro Royalty Trust, 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 Enduro Royalty Trust, which means it’s worth diving deeper into 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 Enduro Royalty Trust. You can find everything you need to know about Enduro Royalty Trust in the latest infographic research report. If you are no longer interested in Enduro Royalty Trust, 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.