Is It The Right Time To Buy The Habit Restaurants Inc (NASDAQ:HABT)?
The Habit Restaurants Inc (NASDAQ:HABT), a hospitality company based in United States, led the NasdaqGM gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Habit Restaurants’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Habit Restaurants
What’s the opportunity in Habit Restaurants?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 1.74x is currently trading slightly below its industry peers’ ratio of 2.37x, which means if you buy Habit Restaurants today, you’d be paying a relatively fair price for it. And if you believe Habit Restaurants should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Habit Restaurants’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 the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Habit Restaurants?
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. With revenues expected to grow by 35.45% over the next couple of years, the future seems bright for Habit Restaurants. If the level of expenses is able to be maintained, it looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in HABT’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at HABT? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on HABT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for HABT, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Habit Restaurants. You can find everything you need to know about Habit Restaurants in the latest infographic research report. If you are no longer interested in Habit Restaurants, 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.
