At US$39.46, Is It Time To Put Textainer Group Holdings Limited (NYSE:TGH) On Your Watch List?

By
Simply Wall St
Published
February 16, 2022
NYSE:TGH
Source: Shutterstock

While Textainer Group Holdings Limited (NYSE:TGH) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NYSE. 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 take a look at Textainer Group Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Textainer Group Holdings

Is Textainer Group Holdings still cheap?

Good news, investors! Textainer Group Holdings is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Textainer Group Holdings’s ratio of 7.05x is below its peer average of 18.67x, which indicates the stock is trading at a lower price compared to the Trade Distributors industry. What’s more interesting is that, Textainer Group Holdings’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Textainer Group Holdings generate?

earnings-and-revenue-growth
NYSE:TGH Earnings and Revenue Growth February 16th 2022

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. With profit expected to grow by a double-digit 17% over the next couple of years, the outlook is positive for Textainer Group Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since TGH is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic profit 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on TGH for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TGH. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. When we did our research, we found 3 warning signs for Textainer Group Holdings (2 don't sit too well with us!) that we believe deserve your full attention.

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

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