What Is Medical Facilities Corporation’s (TSX:DR) Share Price Doing?
Medical Facilities Corporation (TSX:DR), a healthcare providers and services company based in Canada, received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$15.87 at one point, and dropping to the lows of CA$12.5. 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 DR’s current trading price of CA$13.4 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 DR’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 DR
What is DR worth?
Good news, investors! DR is still a bargain right now. My valuation model shows that the intrinsic value for the stock is CA$28.35, but it is currently trading at CA$13.4 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, DR’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because DR’s stock is less volatile than the wider market given its low beta.
Can we expect growth from DR?
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. 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. Though in the case of DR, 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? Although DR is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to DR, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on DR for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Medical Facilities. You can find everything you need to know about DR in the latest infographic research report. If you are no longer interested in Medical Facilities, 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.
