What Is Textainer Group Holdings Limited's (NYSE:TGH) Share Price Doing?

Textainer Group Holdings Limited (NYSE:TGH), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a small cap stock, which tends to lack high analyst coverage, 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? Today I will analyse the most recent data on Textainer Group Holdings’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Textainer Group Holdings

What's The Opportunity In Textainer Group Holdings?

According to my valuation model, Textainer Group Holdings seems to be fairly priced at around 7.5% below my intrinsic value, which means if you buy Textainer Group Holdings today, you’d be paying a fair price for it. And if you believe the company’s true value is $44.24, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Textainer Group Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 does the future of Textainer Group Holdings 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. However, with a negative profit growth of -4.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Textainer Group Holdings. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? TGH seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on TGH for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on TGH should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 3 warning signs for Textainer Group Holdings (2 make us uncomfortable) you should be familiar with.

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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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.