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Is M.D.C. Holdings, Inc. (NYSE:MDC) Potentially Underrated?

Simply Wall St

As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of M.D.C. Holdings, Inc. (NYSE:MDC), it is a financially-sound company with an impressive history high-quality dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on M.D.C. Holdings here.

Good value with adequate balance sheet and pays a dividend

MDC's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that MDC manages its cash and cost levels well, which is a crucial insight into the health of the company. Debt funding requires timely payments on interest to lenders. MDC’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses. MDC's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of MDC's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the market, MDC is also trading below other listed companies on the US stock exchange, relative to earnings generated. This supports the theory that MDC is potentially underpriced.

NYSE:MDC Price Estimation Relative to Market, September 26th 2019

Income investors would also be happy to know that MDC is a great dividend company, with a current yield standing at 2.8%. MDC has also been regularly increasing its dividend payments to shareholders over the past decade.

NYSE:MDC Historical Dividend Yield, September 26th 2019

Next Steps:

For M.D.C. Holdings, I've put together three relevant factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for MDC’s future growth? Take a look at our free research report of analyst consensus for MDC’s outlook.
  2. Historical Performance: What has MDC's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MDC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

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 editorial-team@simplywallst.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. Thank you for reading.