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Is ServiceMaster Global Holdings, Inc. (NYSE:SERV) Potentially Undervalued?

Simply Wall St

ServiceMaster Global Holdings, Inc. (NYSE:SERV), which is in the consumer services 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 US$56.90 at one point, and dropping to the lows of US$33.98. 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 ServiceMaster Global Holdings's current trading price of US$37.16 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 ServiceMaster Global Holdings’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 ServiceMaster Global Holdings

Is ServiceMaster Global Holdings still cheap?

Good news, investors! ServiceMaster Global Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $56.29, but it is currently trading at US$37.16 on the share market, meaning that there is still an opportunity to buy now. ServiceMaster Global Holdings’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will ServiceMaster Global Holdings generate?

NYSE:SERV Past and Future Earnings, January 14th 2020

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. ServiceMaster Global Holdings’s revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since SERV is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. 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 SERV for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SERV. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, 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 ServiceMaster Global Holdings. You can find everything you need to know about ServiceMaster Global Holdings in the latest infographic research report. If you are no longer interested in ServiceMaster Global 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 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.

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. Thank you for reading.