When Should You Buy Ryman Healthcare Limited (NZSE:RYM)?

While Ryman Healthcare Limited (NZSE:RYM) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NZSE over the last few months, increasing to NZ$10.51 at one point, and dropping to the lows of NZ$8.86. 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 Ryman Healthcare's current trading price of NZ$8.86 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ryman Healthcare’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 Ryman Healthcare

What's the opportunity in Ryman Healthcare?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.95x is currently trading slightly below its industry peers’ ratio of 9.02x, which means if you buy Ryman Healthcare today, you’d be paying a decent price for it. And if you believe that Ryman Healthcare should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Ryman Healthcare’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from Ryman Healthcare?

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. Ryman Healthcare's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? RYM’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 RYM? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on RYM, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for RYM, 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Ryman Healthcare you should be mindful of and 1 of them is a bit concerning.

If you are no longer interested in Ryman Healthcare, 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.