Is Mainstreet Equity Corp. (TSE:MEQ) Potentially Undervalued?

While Mainstreet Equity Corp. (TSE:MEQ) might not have the largest market cap around , it saw significant share price movement during recent months on the TSX, rising to highs of CA$213 and falling to the lows of CA$186. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mainstreet Equity's current trading price of CA$186 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mainstreet Equity’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Mainstreet Equity

What Is Mainstreet Equity Worth?

According to our valuation model, the stock is currently overvalued by about 29%, trading at CA$186 compared to our intrinsic value of CA$144.80. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Mainstreet Equity’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.

What does the future of Mainstreet Equity look like?

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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Mainstreet Equity, at least in the near future.

What This Means For You

Are you a shareholder? If you believe MEQ should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on MEQ for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

If you'd like to know more about Mainstreet Equity as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for Mainstreet Equity (2 are a bit unpleasant!) that we believe deserve your full attention.

If you are no longer interested in Mainstreet Equity, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.