Is It Too Late To Buy New Residential Investment Corp (NYSE:NRZ)?
New Residential Investment Corp (NYSE:NRZ), a mortgage 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 $16.09 to $17.54. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at New Residential Investment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for New Residential Investment
Is New Residential Investment still cheap?
Great news for investors – New Residential Investment is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $32.83, but it is currently trading at US$16.94 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, New Residential Investment’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will New Residential Investment 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 New Residential Investment, at least in the near future.
What this means for you:
Are you a shareholder? Although NRZ is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to NRZ, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on NRZ for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on New Residential Investment. You can find everything you need to know about New Residential Investment in the latest infographic research report. If you are no longer interested in New Residential Investment, 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.
