At CHF13.90, Is It Time To Put Meier Tobler Group AG (VTX:MTG) On Your Watch List?

While Meier Tobler Group AG (VTX:MTG) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the SWX over the last few months. 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 examine Meier Tobler Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Meier Tobler Group

Is Meier Tobler Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% below my intrinsic value, which means if you buy Meier Tobler Group today, you’d be paying a fair price for it. And if you believe the company’s true value is CHF17.11, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Meier Tobler Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Meier Tobler Group look like?

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. Meier Tobler Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in MTG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on MTG, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Meier Tobler Group at this point in time. Every company has risks, and we've spotted 4 warning signs for Meier Tobler Group (of which 1 makes us a bit uncomfortable!) you should know about.

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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. 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.
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