Is It Too Late To Buy Hammerson plc (LSE:HMSO)?
Hammerson plc (LSE:HMSO), a equity real estate investment trusts (reits) company based in United Kingdom, saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £5.8 and falling to the lows of £5.14. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether HMSO’s current trading price of £5.24 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at HMSO’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 Hammerson
What is HMSO worth?
According to my relative valuation model, HMSO seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.4x is currently trading slightly below its industry peers’ ratio of 14.2x, which means if you buy HMSO today, you’d be paying a fair price for it. And if you believe HMSO should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like HMSO’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because HMSO’s stock is less volatile than the wider market given its low beta.
What does the future of HMSO look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 HMSO future expectations. Though in the case of HMSO, it is expected to deliver a relatively unexciting earnings growth of 3.19%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for HMSO, at least in the near term.
What this means for you:
Are you a shareholder? HMSO’s optimistic future growth appears to have been factored into the current share price, 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 HMSO? 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 HMSO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for HMSO, 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 Hammerson. You can find everything you need to know about HMSO in the latest infographic research report. If you are no longer interested in Hammerson, 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.
