The Ensign Group, Inc. (NASDAQ:ENSG), which is in the healthcare business, and is based in United States, saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a mid-cap 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? Let’s examine Ensign Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Ensign Group worth?
According to my valuation model, Ensign Group seems to be fairly priced at around 13.41% above my intrinsic value, which means if you buy Ensign Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $40.49, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Ensign Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Ensign Group?
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. Ensign Group’s earnings over the next few years are expected to increase by 31%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? ENSG’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 track record of its management team. 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 tabs on ENSG, 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 Ensign Group. You can find everything you need to know about Ensign Group in the latest infographic research report. If you are no longer interested in Ensign Group, 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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