Federal Agricultural Mortgage Corporation (NYSE:AGM), operating in the financial services industry based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of US$87.65 and falling to the lows of US$79.48. 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 Federal Agricultural Mortgage's current trading price of US$82.58 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 Federal Agricultural Mortgage’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Federal Agricultural Mortgage still cheap?
According to my valuation model, Federal Agricultural Mortgage seems to be fairly priced at around 8.3% below my intrinsic value, which means if you buy Federal Agricultural Mortgage today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $90.10, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Federal Agricultural Mortgage’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Federal Agricultural Mortgage?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 23% over the next couple of years, the future seems bright for Federal Agricultural Mortgage. It looks like higher cash flow 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 AGM’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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on AGM, 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 the company, which means it’s worth diving deeper into 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 Federal Agricultural Mortgage. You can find everything you need to know about Federal Agricultural Mortgage in the latest infographic research report. If you are no longer interested in Federal Agricultural Mortgage, 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 email@example.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.
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