Federal Agricultural Mortgage Corporation (NYSE:AGM), operating in the financial services industry based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $98.52 and falling to the lows of $68.99. 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 Federal Agricultural Mortgage’s current trading price of $68.99 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 Federal Agricultural Mortgage’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Federal Agricultural Mortgage?
According to my valuation model, Federal Agricultural Mortgage seems to be fairly priced at around 13.01% above my intrinsic value, which means if you buy Federal Agricultural Mortgage today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $61.05, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Federal Agricultural Mortgage’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Federal Agricultural Mortgage generate?
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 the company’s future expectations. Federal Agricultural Mortgage’s earnings growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in AGM’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? 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 tabs on AGM, 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 the company, 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 Federal Agricultural Mortgage. You can find everything you need to know about Federal Agricultural Mortgage in the latest infographic research report. If you are no longer interested in Federal Agricultural Mortgage, 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 email@example.com.