Is Fly Leasing Limited (NYSE:FLY) Potentially Undervalued?
Fly Leasing Limited (NYSE:FLY), which is in the trade distributors business, and is based in Ireland, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $15.2 and falling to the lows of $13.53. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Fly Leasing’s current trading price of $14.17 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 Fly Leasing’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Fly Leasing
Is Fly Leasing still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.05x is currently trading slightly below its industry peers’ ratio of 15.9x, which means if you buy Fly Leasing today, you’d be paying a reasonable price for it. And if you believe that Fly Leasing should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Fly Leasing’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Fly Leasing 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. With profit expected to more than double over the next couple of years, the future seems bright for Fly Leasing. 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? FLY’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 FLY? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping tabs on FLY, 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 FLY, 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 Fly Leasing. You can find everything you need to know about Fly Leasing in the latest infographic research report. If you are no longer interested in Fly Leasing, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
