Stock Analysis

What Is Mayfield Childcare Limited's (ASX:MFD) Share Price Doing?

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ASX:MFD
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While Mayfield Childcare Limited (ASX:MFD) might not be the most widely known stock at the moment, it led the ASX gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, 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 Mayfield Childcare’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Mayfield Childcare

What's the opportunity in Mayfield Childcare?

Good news, investors! Mayfield Childcare is still a bargain right now. According to my valuation, the intrinsic value for the stock is A$1.15, but it is currently trading at AU$0.90 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Mayfield Childcare’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Mayfield Childcare generate?

earnings-and-revenue-growth
ASX:MFD Earnings and Revenue Growth January 27th 2021

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 the company's future expectations. Mayfield Childcare's earnings over the next few years are expected to increase by 49%, 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? Since MFD 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 MFD for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MFD. 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 investment decision.

If you'd like to know more about Mayfield Childcare as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with Mayfield Childcare, and understanding these should be part of your investment process.

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