Is It Time To Consider Buying Morgan Sindall Group plc (LON:MGNS)?

Morgan Sindall Group plc (LON:MGNS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£25.40 at one point, and dropping to the lows of UK£22.30. 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 Morgan Sindall Group's current trading price of UK£23.65 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 Morgan Sindall Group’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 Morgan Sindall Group

What is Morgan Sindall Group worth?

Morgan Sindall Group appears to be overvalued by 37% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£23.65 on the market compared to my intrinsic value of £17.23. This means that the opportunity to buy Morgan Sindall Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Morgan Sindall Group’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 Morgan Sindall Group?

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. Morgan Sindall Group's earnings over the next few years are expected to increase by 32%, 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? MGNS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe MGNS 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. 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 tabs on MGNS for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for MGNS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Morgan Sindall Group as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Morgan Sindall Group has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Morgan Sindall Group, 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.