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Have Investors Already Priced In The Habit Restaurants Inc’s (HABT) Growth?

The Habit Restaurants Inc (NASDAQ:HABT), a hotels, restaurants and leisure company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGM, rising to the highs of $15.75 and falling to the lows of $12. 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 HABT’s current trading price of $12.15 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 HABT’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for HABT

Is HABT still cheap?

According to my relative valuation model, the stock is currently overvalued. 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 HABT’s ratio of 47.2x is above its peer average of 25.6x, which suggests the stock is overvalued compared to the hotels, restaurants and leisure industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since HABT’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much HABT moves relative to the rest of the market.

What kind of growth will HABT generate?

NasdaqGM:HABT Future Profit Oct 30th 17
NasdaqGM:HABT Future Profit Oct 30th 17

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 HABT future expectations. With profit expected to more than double over the next couple of years, the future seems bright for HABT. 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 well and truly priced in HABT’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe HABT 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 HABT for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for HABT, 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 Habit Restaurants. You can find everything you need to know about HABT in the latest infographic research report. If you are no longer interested in Habit Restaurants, 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.

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