Town Sports International Holdings, Inc. (NASDAQ:CLUB), which is in the hospitality business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Town Sports International Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Town Sports International Holdings still cheap?
Great news for investors – Town Sports International Holdings is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $3.55, but it is currently trading at US$1.80 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Town Sports International Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Town Sports International Holdings generate?
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. 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. Though in the case of Town Sports International Holdings, it is expected to deliver a relatively unexciting earnings growth of 1.0%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Town Sports International Holdings, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since CLUB is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on CLUB for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CLUB. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Town Sports International Holdings. You can find everything you need to know about Town Sports International Holdings in the latest infographic research report. If you are no longer interested in Town Sports International Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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