Is There Now An Opportunity In Kennedy-Wilson Holdings, Inc. (NYSE:KW)?
Kennedy-Wilson Holdings, Inc. (NYSE:KW), which is in the real estate business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $22.52 at one point, and dropping to the lows of $20.11. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Kennedy-Wilson Holdings's current trading price of $21.39 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Kennedy-Wilson Holdings’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 Kennedy-Wilson Holdings
Is Kennedy-Wilson Holdings still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 20.58x is currently trading slightly above its industry peers’ ratio of 16.91x, which means if you buy Kennedy-Wilson Holdings today, you’d be paying a relatively reasonable price for it. And if you believe that Kennedy-Wilson Holdings should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Kennedy-Wilson Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Kennedy-Wilson Holdings look like?
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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Kennedy-Wilson Holdings, at least in the near future.
What this means for you:
Are you a shareholder? Currently, KW appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on KW, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on KW for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on KW should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Kennedy-Wilson Holdings. You can find everything you need to know about Kennedy-Wilson Holdings in the latest infographic research report. If you are no longer interested in Kennedy-Wilson Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
