While MJ Gleeson plc (LON:GLE) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£9.00 at one point, and dropping to the lows of UK£8.08. 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 MJ Gleeson's current trading price of UK£8.08 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 MJ Gleeson’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for MJ Gleeson
What is MJ Gleeson worth?
Great news for investors – MJ Gleeson is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £11.28, but it is currently trading at UK£8.08 on the share market, meaning that there is still an opportunity to buy now. However, given that MJ Gleeson’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 MJ Gleeson look like?
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. MJ Gleeson'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? Since GLE is currently undervalued, it may be a great time to accumulate more of 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 financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on GLE for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GLE. 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.
So while earnings quality is important, it's equally important to consider the risks facing MJ Gleeson at this point in time. You'd be interested to know, that we found 1 warning sign for MJ Gleeson and you'll want to know about it.
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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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About LSE:GLE
MJ Gleeson
Engages in house building, and land promotion and sale businesses in the United Kingdom.
Flawless balance sheet with moderate growth potential.
