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Is Star Bulk Carriers Corp. (NASDAQ:SBLK) Potentially Undervalued?

Simply Wall St

Star Bulk Carriers Corp. (NASDAQ:SBLK), which is in the shipping business, and is based in Greece, saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Star Bulk Carriers’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Star Bulk Carriers

What's the opportunity in Star Bulk Carriers?

Great news for investors – Star Bulk Carriers is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $19.55, but it is currently trading at US$11.54 on the share market, meaning that there is still an opportunity to buy now. However, given that Star Bulk Carriers’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Star Bulk Carriers?

NasdaqGS:SBLK Past and Future Earnings, December 24th 2019

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 an expected decline of -4.5% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Star Bulk Carriers. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although SBLK is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to SBLK, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on SBLK for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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