At US$33.74, Is It Time To Put Tri Pointe Homes, Inc. (NYSE:TPH) On Your Watch List?

Tri Pointe Homes, Inc. (NYSE:TPH), is not the largest company out there, but it saw a decent share price growth of 10% on the NYSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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? Today we will analyse the most recent data on Tri Pointe Homes’s outlook and valuation to see if the opportunity still exists.

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Is Tri Pointe Homes Still Cheap?

According to our valuation model, Tri Pointe Homes seems to be fairly priced at around 19% below our intrinsic value, which means if you buy Tri Pointe Homes today, you’d be paying a fair price for it. And if you believe that the stock is really worth $41.81, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Tri Pointe Homes’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.

Check out our latest analysis for Tri Pointe Homes

Can we expect growth from Tri Pointe Homes?

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 an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Tri Pointe Homes, at least in the near future.

What This Means For You

Are you a shareholder? TPH seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 an eye on TPH for a while, now may not be the most advantageous 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 TPH should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Tri Pointe Homes at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Tri Pointe Homes.

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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.