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Is SP Plus Corporation (NASDAQ:SP) Potentially Undervalued?

Simply Wall St

SP Plus Corporation (NASDAQ:SP), which is in the commercial services business, and is based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$46.30 at one point, and dropping to the lows of US$40.80. 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 SP Plus's current trading price of US$43.70 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 SP Plus’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 SP Plus

Is SP Plus still cheap?

Good news, investors! SP Plus is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $61.85, but it is currently trading at US$43.70 on the share market, meaning that there is still an opportunity to buy now. SP Plus’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 SP Plus generate?

NasdaqGS:SP Past and Future Earnings, February 7th 2020

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 8.7% expected over the next year, growth doesn’t seem like a key driver for a buy decision for SP Plus, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since SP is currently undervalued, it may be a great time to accumulate more of 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 SP for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SP. 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 investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on SP Plus. You can find everything you need to know about SP Plus in the latest infographic research report. If you are no longer interested in SP Plus, 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.