Genworth Mortgage Insurance Australia Limited (ASX:GMA), operating in the financial services industry based in Australia, saw a decent share price growth in the teens level on the ASX over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Genworth Mortgage Insurance Australia’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Genworth Mortgage Insurance Australia still cheap?Great news for investors – Genworth Mortgage Insurance Australia is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$3.95, but it is currently trading at AU$2.43 on the share market, meaning that there is still an opportunity to buy now. However, given that Genworth Mortgage Insurance Australia’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Genworth Mortgage Insurance Australia?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. With profit expected to grow by 52% over the next couple of years, the future seems bright for Genworth Mortgage Insurance Australia. 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? Since GMA is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on GMA for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GMA. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Genworth Mortgage Insurance Australia. You can find everything you need to know about Genworth Mortgage Insurance Australia in the latest infographic research report. If you are no longer interested in Genworth Mortgage Insurance Australia, 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.