Should You Think About Buying Franklin Street Properties Corp. (NYSEMKT:FSP) Now?
Franklin Street Properties Corp. (NYSEMKT:FSP), which is in the reits business, and is based in United States, received a lot of attention from a substantial price increase on the AMEX over the last few months. Less-covered, small caps sees 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 take a look at Franklin Street Properties’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Franklin Street Properties
What's the opportunity in Franklin Street Properties?
The stock is currently trading at US$5.41 on the share market, which means it is overvalued by 36% compared to my intrinsic value of $3.97. This means that the opportunity to buy Franklin Street Properties at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Franklin Street Properties’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.
What kind of growth will Franklin Street Properties generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Franklin Street Properties, at least in the near future.
What this means for you:
Are you a shareholder? If you believe FSP should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on FSP for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Franklin Street Properties. You can find everything you need to know about Franklin Street Properties in the latest infographic research report. If you are no longer interested in Franklin Street Properties, 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.
