Stock Analysis

Is It Too Late To Consider Buying Marks and Spencer Group plc (LON:MKS)?

  •  Updated
LSE:MKS
Source: Shutterstock

While Marks and Spencer Group plc (LON:MKS) might not be the most widely known stock at the moment, it led the LSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Marks and Spencer Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Our analysis indicates that MKS is potentially undervalued!

Is Marks and Spencer Group Still Cheap?

According to my valuation model, Marks and Spencer Group seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Marks and Spencer Group today, you’d be paying a fair price for it. And if you believe the company’s true value is £1.41, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Marks and Spencer 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Marks and Spencer Group look like?

earnings-and-revenue-growth
LSE:MKS Earnings and Revenue Growth December 3rd 2022

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. However, with a relatively muted profit growth of 7.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Marks and Spencer Group, at least in the short term.

What This Means For You

Are you a shareholder? MKS’s future growth appears to have been factored into the current share price, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on MKS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

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

Valuation is complex, but we're helping make it simple.

Find out whether Marks and Spencer Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis