Anworth Mortgage Asset Corporation (NYSE:ANH), a mortgage real estate investment trusts (reits) company based in United States, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $5.66 to $6.2. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ANH’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Anworth Mortgage Asset
What is ANH worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1% above my intrinsic value, which means if you buy ANH today, you’d be paying a relatively fair price for it. And if you believe that ANH is really worth $5.61, there’s only an insignificant downside when the price falls to its real value. Furthermore, ANH’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for ANH to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What does the future of ANH look like?
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. Though in the case of ANH, it is expected to deliver a negative revenue growth of -18.88% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, ANH appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on ANH, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ANH for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ANH should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Anworth Mortgage Asset. You can find everything you need to know about ANH in the latest infographic research report. If you are no longer interested in Anworth Mortgage Asset, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.