MCAN Mortgage Corporation (TSE:MKP), operating in the financial services industry based in Canada, maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$15.65 to CA$16.06. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MCAN Mortgage’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is MCAN Mortgage worth?
Good news, investors! MCAN Mortgage is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$23.06, but it is currently trading at CA$15.96 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, MCAN Mortgage’s share price is theoretically 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.
Can we expect growth from MCAN 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. 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 a negative profit growth of -5.5% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for MCAN Mortgage. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although MKP 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 MKP, 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 MKP 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 MCAN Mortgage. You can find everything you need to know about MCAN Mortgage in the latest infographic research report. If you are no longer interested in MCAN Mortgage, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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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. Thank you for reading.