NewRiver REIT plc (LSE:NRR), a reits company based in United Kingdom, saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £3.17 and falling to the lows of £2.78. 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 NewRiver REIT’s current trading price of £2.89 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 NewRiver REIT’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for NewRiver REIT
Is NewRiver REIT still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. 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 NewRiver REIT’s ratio of 12.24x is trading slightly above its industry peers’ ratio of 9.53x, which means if you buy NewRiver REIT today, you’d be paying a relatively reasonable price for it. And if you believe NewRiver REIT should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like NewRiver REIT’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of NewRiver REIT 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. NewRiver REIT’s earnings over the next few years are expected to increase by 27.21%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? NRR’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at NRR? 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 an eye on NRR, 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 NRR, which means it’s worth diving deeper into 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 NewRiver REIT. You can find everything you need to know about NewRiver REIT in the latest infographic research report. If you are no longer interested in NewRiver REIT, 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.